Chilean Peso Closes Weaker On Tumbles In Euro, Copper Price

By Carolina Pica

Of DOW JONES NEWSWIRES

SANTIAGO (Dow Jones)--The Chilean peso ended weaker against the U.S. dollar Tuesday, falling from a year-to-date high close the previous session, on the tumbles in the euro and London copper.

The peso ended at CLP530.90 to the dollar, compared to CLP528.60 Monday, after moving in a narrow range of CLP530.00 to CLP532.30.

The dollar was substantially higher against the euro and other currencies Tuesday morning in the New York as stock markets retreated and investors backed away from risk-sensitive currencies. The peso often moves in the same direction the common currency does against the dollar.

Spot copper on the London Metal Exchange, meanwhile, fell 1.2% from Monday to $2.90095 a pound, according to state copper commission Cochilco's daily market report. Local currency market participants often take direction from copper prices as Chile produces about 35% of the metal in the world.

In its daily sales on behalf of the Finance Ministry, the central bank sold $40 million at a weighted average of CLP532.25 to the dollar. The monetary authority doesn't provide the information on which banks bid for dollar sales.

Earlier in the year, the Finance Ministry began a $4 billion sale, repatriated from one of its sovereign-wealth funds, in the local market. The ministry is selling the $4 billion, earmarked to finance this year's expected fiscal deficit, at a rate of $40 million a day.

So far, it has sold $3.48 billion. The dollar sales are scheduled to finish by the end of November.

In the local bond market, yields on the inflation-indexed Chilean central-bank bonds, or BCUs, ended lower in a technical correction in thin volume, traders said, as most market attention was focused on a corporate bond issue.

Banco de Credito del Peru (CREDITC1.VL) issued about $107 million in five-year bonds on the Chilean market Tuesday. This was the second so-called "Huaso" bond in which a foreign company issues bonds on the Chilean market. In April, Mexican telecommunications firm America Movil SA (AMX), became the first foreign company to issue a Huaso bond.

Yields on Chilean five-year BCUs ended at 2.56%, down from 2.59% Monday. The yield on 10-year BCUs ended at 3.11%, down from 3.13% Monday.

-By Carolina Pica, Dow Jones Newswires; 56-2-820-4244; carolina.pica@dowjones.com

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(END) Dow Jones Newswires

November 03, 2009 12:13 ET (17:13 GMT)


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