Bloomberg News

Chilean Peso Depreciates as Copper Falls on U.S. Fiscal Concern

November 28, 2012

Chile’s peso weakened as copper declined on concern U.S. authorities have made little progress in talks to avoid automatic tax increases and spending cuts.

The currency depreciated 0.1 percent to 481 per U.S. dollar at the close in Santiago after falling 0.5 percent. International investors in the Chilean peso forwards market cut bets against the currency to a six-month low of $6.8 billion on Nov. 26, according to central bank data published today.

The peso and copper pared losses as U.S. President Barack Obama and Speaker of the House John Boehner fueled optimism lawmakers will be able to avert a so-called fiscal cliff. Copper for March delivery dropped 0.6 percent on the Comex in New York to $3.531 a pound after earlier falling 1.6 percent.

“The dollar has appreciated versus yesterday on external factors,” said Matias Madrid, the chief economist at Banco Penta in Santiago. “Copper’s falling because there’s uncertainty around the fiscal agreement in the U.S.”

Minutes published by the central bank today showed that bankers didn’t consider raising or lowering the 5 percent target lending rate in November. Chile’s central bank has left the rate unchanged since January, helping to support an 8 percent appreciation of the currency this year.

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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