Chile’s peso fell as copper dropped amid speculation demand will slow in China, the world’s biggest buyer of the metal.
The peso dropped 0.4 percent to 474.75 per U.S. dollar at the close in Santiago, extending its weekly decline to 0.5 percent. The currency has traded in an intra-day range of 467 to 476 per dollar for more than a month.
The price of copper plunged as much as 3 percent today after a report showed foreign direct investment in China fell and an adviser to China’s central bank said the government won’t provide major economic stimulus after industrial output and retail sales accelerated in September. Copper is Chile’s top export.
International investors in the Chilean peso forwards market had a $7.3 billion short peso position on Oct. 17, according to central bank data published today. That is their smallest bet against the peso since May.
“Chile has good levels of debt and savings, relatively high interest rates and under-control inflation, so local fundamentals still support peso appreciation,” said Alejandro Araya, a trader at Banco Santander Chile in Santiago.
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