Bloomberg News

Chile Peso Drops as Europe, China Data Push Copper Prices Lower

February 22, 2012

Feb. 22 (Bloomberg) -- Chile’s peso snapped a four-day winning streak after lower-than-forecast economic data from China and Europe pushed down copper, the South American country’s biggest export, and stifled demand for riskier emerging-market assets.

The peso fell 0.4 percent to 483.25 per U.S. dollar at the close in Santiago, from 481.5 yesterday.

“The drop in copper prices, the fall of the euro earlier today and global stocks moved the peso,” Francisca Roa, an analyst at Netgociando.com, said today in a phone interview. “We see a deterioration of external factors that is having an effect on the exchange rate here.”

Copper retreated as much as 1.1 percent in New York and global stocks fell. The euro weakened as much as 0.2 percent earlier today before recovering and gaining 0.1 percent.

A purchasing-managers index of euro-area services and manufacturing dropped to 49.7, London-based Markit Economics said, below the 50.5 median estimate of economists surveyed by Bloomberg. A preliminary indicator from HSBC Holdings Plc and Markit Economics signaled that Chinese manufacturing activity may shrink for a fourth straight month.

A central bank survey today said that Chilean traders and investors forecast the monetary authority will keep its key interest rate at 5 percent in March as inflation estimates increase. Traders also raised their 12-month annual inflation forecast to 3.2 percent from 3.09 percent on Feb. 7.

Chile’s central bank sold today on behalf of the government 10- and 20-year peso bonds to yield 5.48 and 5.7 percent, respectively. It also sold inflation-adjusted notes due in the same periods at 2.43 percent and 2.78 percent.

Two-year inflation swaps in pesos fell by two basis points, or 0.02 percentage point, to 4.88 percent. The yield on a basket of 10-year inflation-adjusted bonds rose seven basis points to 2.45 percent, while one-year break-even inflation fell 2 basis points to 3.19 percent.

--Editors: Richard Richtmyer,

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

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


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