Bloomberg News

Chile’s Peso Advances as German Sentiment Index Buoys Outlook

October 16, 2012

Chile’s peso rallied to its highest level this month as improved German investor sentiment bolstered the global economic outlook and supported demand for emerging- market assets.

The peso appreciated 0.3 percent to 470.75 per U.S. dollar at 10:26 a.m. in Santiago. It earlier was stronger than 470 for the first time since Sept. 27. Chile’s markets were closed yesterday for a holiday.

“Yesterday was positive for the markets and today is similar so the peso is following that trend and playing catchup,” said Eugenio Cortes, head of currency forwards at EuroAmerica Corredores de Bolsa SA in Santiago.

The 17-nation euro rose above $1.30 for the first time in a week after a report from the ZEW Center for European Economic Research in Mannheim showed an index of investor expectations was higher than analysts’ forecasts in September. Chilean traders follow the euro as an indicator of the relative strength or weakness of the dollar.

“The euro is rising strongly, which means there is appetite to take the dollar weaker, but there is wariness about being short dollars at these levels,” Cortes said. “In the event of any negative news, the drop in the peso will be much sharper than any potential gain from positive news.”

A short position is a bet an asset may decline in value.

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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