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Chile’s peso gained, trimming the steepest weekly decline among Latin American currencies, after copper rebounded and the central bank left the country’s benchmark interest rate unchanged at 5 percent.
The peso gained 0.2 percent to 503.66 per U.S. dollar as of 10:58 a.m. Santiago time. The peso has declined 3.3 percent from 487 on May 11, amid a broad emerging-market selloff, the biggest drop among regional currencies tracked by Bloomberg.
Chile’s peso broke through 500 for the first time since January as the price of the country’s main export copper tumbled. Copper gained as much as 1.1 percent in New York today after reaching a four-month low on May 16.
“It has been a bad week for the markets in general with generalized stop losses in the Chilean market as we broke through a range that had been held for two or three months,” said Eugenio Cortes, head of currency forwards at EuroAmerica Corredores de Bolsa SA in Santiago. “We can expect a technical bounce after four days of heavy declines that may take the exchange rate below 500 for a few days. It depends how markets evolve today.”
Offshore investors in the Chilean peso forwards market increased their short position in the currency to $8.9 billion on May 16, the biggest since October 2009 and a $1.1 billion increase in a week.
Pension funds and other local investors placed a $1.8 billion bet on the Chilean peso in the forwards market in the seven days through May 16. They had a $16.8 billion long peso position, the highest since April 4.
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