Chile’s peso fell from a two-month high after copper fell on China’s plans to curb the real estate market.

The peso declined 0.8 percent to 489.03 per U.S. dollar from 485.35 yesterday. Copper for September delivery fell as much as 3.3 percent to $3.418 a pound on the Comex in New York.

China is the world’s biggest buyer of copper, which makes up half of Chile’s exports. The Chinese government said it will maintain a “firm grip” on the property market to prevent a rebound in house prices. The peso, the region’s best performing major currency in July, strengthened 0.3 percent this week.

“In the last few days we have had an absence of news from Europe which had allowed some of that rally,” said Alejandro Cuadrado, the chief Latin American currency strategist at Banco Bilbao Vizcaya Argentaria SA (BBVA) in New York. “In the last few sessions it has started to look a bit stretched and is no longer outperforming copper. They are trading more in tandem.”

BBVA was the most accurate forecaster of Latin American currencies in the six quarters through June, according to data from Bloomberg Rankings.

International investors in the Chilean peso forwards market had a $9.2 billion short position in the peso on July 18, according to central bank data published 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