The Greenback Picks Up Steam in Chile, Helps Exporters

The U.S. dollar closed in Chile at its highest in two months last week, 531 pesos, following the continuous drop in copper prices, the country’s leading export. In the first week of 2007, the Chilean peso accumulates a depreciation against the U.S. dollar of 3.79 percent, which contrasts with the 8.5 percent appreciation of 2005.

“The Chilean peso is suffering from the fall in copper’s international prices, in spite of the fact that we won’t actually see less U.S. dollars coming into Chile until the second half of 2007”, said Raul Toro a money market analyst in Santiago.

Last Friday copper dropped to $2.89 a pound, as stacked up against $2.91 the previous week and $3.40 just a couple of months ago.

An appreciation of the Chilean peso, even modest, is considered positive by most non-mineral exporters who have seen their profit margins drop dramatically as costs (in Chilean pesos increase) and income (in U.S. dollars) erodes.