Bloomberg News

Chile Peso Weakens After Germany Damps Hopes of Europe Debt Fix

October 17, 2011

Oct. 17 (Bloomberg) -- Chile’s peso fell, following the currency’s biggest weekly gain in almost two years, after Germany damped expectations of a solution to Europe’s debt crisis.

The peso declined 0.8 percent to 504.01 per U.S. dollar from 499.76 on Oct. 14. The currency gained 3.8 percent last week, its biggest increase since the period ended Nov. 13, 2009.

Group of 20 finance ministers and central bankers ended weekend talks in Paris by backing Europe’s plan to bolster banks and avoid a Greek default, setting a deadline for a final agreement of Oct. 23. Germany’s Chancellor Angela Merkel warned of “dreams taking hold” that the planned package would solve everything, according to a spokesman.

“The peso’s trading negatively after the German comments,” said Katia Diaz, an economist at 4Cast Inc. in New York. “Germany tried to ease the markets’ hopes after optimistic comments at the weekend and there’s been some pullback.”

Copper, which accounts for more than half of Chile’s exports, fell 0.9 percent.

Electricity prices in central Chile are set to fall between 4 percent and 5 percent in November, La Tercera wrote today, citing people involved in the industry whom it didn’t identify. The change will cut consumer price inflation next month by 0.11 percentage point to between 0 and 0.2 percent, economists at BCI wrote.

--Editor: Marie-France Han

To contact the reporter on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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