Bloomberg News

Chilean Peso Strengthens as Investors Bet on Tightening Signals

April 03, 2012

Chile’s peso strengthened for a third day amid speculation the central bank will signal interest-rate increases in a speech today as inflation quickens.

The peso gained 0.3 percent to 481.95 per U.S. dollar at 10:03 a.m. in Santiago, from 483.25 yesterday.

Central bank President Rodrigo Vergara will deliver to Congress today his quarterly monetary policy report, including forecasts for gross domestic product, copper prices and inflation. Interest-rate swaps and breakeven inflation rates have surged the most in at least three years since Vergara unexpectedly lowered rates by a quarter point in January in just his second meeting as president.

“Investors are waiting for the policy report and are guessing the central bank will hint at potential rate increases, which would strengthen the peso,” said Sergio Tricio, an analyst at ForexChile in Santiago. “Also, copper broke an important resistance level yesterday and that’s pushing up the peso.”

Copper for May delivery rose 0.2 percent to $3.9275 a pound in New York today after surging as much as 2.8 percent yesterday. Chile is the biggest producer of the metal.

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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