Bloomberg News

Chile Peso Rises on Speculation Central Banks Will Spur Growth

June 05, 2012

Chile’s peso advanced for a second day on speculation central banks will act to stem declines in global assets and restore economic confidence.

The peso appreciated 0.6 percent to 512.32 per U.S. dollar after touching a five-month low of 522.79 on June 1. The Bloomberg JPMorgan Latin American Currency Index gained 0.6 percent.

“If you go long dollars and monetary authorities act, unilaterally or together, you’ll get killed,” said Cristian Donoso, a trader at Banchile Corredores de Bolsa SA in Santiago.

Finance ministers and central bank governors from the world’s leading economies agreed to coordinate their response to Europe’s financial crisis on a conference call that dealt with Spain and Greece.

Group of Seven officials said they will work together to help both euro-area countries place their public finances on a sustainable footing, Japanese Finance Minister Jun Azumi told reporters in Tokyo following the call today. Azumi said he urged European leaders to do more to address investors’ concern about the region’s finances.

Chile’s economy expanded 4.8 percent in April from a year earlier, the central bank said today, matching the median forecast of economists surveyed by Bloomberg. Activity grew 0.5 percent from a month earlier.

International investors in the peso forwards market had the second-largest short peso position on record on June 1, with a $10.1 billion bet against the Andean currency, nearing the record $10.2 billion bet they had May 24.

Chilean bond yields and swap rates also rose for a second day. The yield on five-year fixed-rate bonds in pesos, which reached a three-month low of 5.05 percent on June 1, climbed three basis points to 5.17 percent today.

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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