Chile’s currency declined to a three-week low after Germany’s unemployment rate increased and European confidence fell, undermining demand for higher-yielding assets in emerging markets.
The peso fell 0.7 percent to 509.48 per dollar after touching 510.63, its lowest level since June 6. It has declined 4.1 percent this quarter. The Bloomberg JPMorgan Latin American Currency Index fell 0.5 percent.
The peso was the worst performer against the dollar among major Latin America currencies tracked by Bloomberg on speculation slowing global growth will curb demand for copper, Chile’s main export. European Union leaders were divided on the sovereign-debt crisis as they began a two-day summit.
“Given that the world is turning to a lower growth environment, it’s difficult to see increased demand for metals even with a positive outcome from the European summit,” Diego Donadio, a strategist at BNP Paribas SA, said in a phone interview from Sao Paulo.
Futures on copper fell as much as 1.2 percent. Chile relies on copper for half its exports.
International investors in the Chilean peso forwards market had a $9.9 billion bet against the currency on June 26, little changed from May. Local investors had a $16.9 billion long peso position.
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