Chile’s peso dropped as the price of copper fell, stocks fell worldwide and offshore investors increased bets against the currency to a two-year high.
The peso weakened 0.2 percent to 485.01 per U.S. dollar today in Santiago. Offshore investors in the Chilean peso forwards market increased their bets against the currency to $7 billion on April 4, the central bank said today.
Copper for May delivery slid as much as 2.4 percent in New York after faster inflation in China, the biggest buyer of the South American nation’s main export, signaled policy makers may refrain from stimulus. Global stocks fell after an April 6 report showed job creation in the U.S. was less than forecast.
“The concern now is global growth,” said Cristian Donoso, a currency trader at Banchile Corredores de Bolsa SA in Santiago. “Inflation rose a bit in China which gives less room for authorities to cut bank reserve requirements. Copper’s down, New York stocks are down and the euro is down. That means the greenback is strengthening.”
Chile’s $3.6 billion in copper exports accounted for almost half the country’s $7.3 billion worth of total exports in March, according to data published today by the central bank.
Local investors increased their long position in pesos in the forwards market to the highest since June on March 30.
Chilean interest-rate swaps fell for a third day. The two- year swap rate fell six basis points, or 0.06 percentage point, to 5.44 percent. The two-year break-even inflation rate fell to 3.29 percent, the lowest since March 1.
The Chilean swaps market was closed on April 6.
“There’s a strong decline in nominal rates and break evens are normalizing,” said Rodrigo Blazquez, a trader at Deutsche Bank AG in Santiago. “U.S. Treasury yields fell hard on Friday and Chile’s correlated swaps are catching up.”
The yield on 10-year U.S. Treasury bonds fell 13 basis points on April 6 and a further two basis points today after U.S. non-farm payrolls expanded by 120,000 jobs rather than the 205,000 median estimate among analysts surveyed by Bloomberg.
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