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Chile Peso Poised for Weekly Gain as Copper Boosts Trade Outlook

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By Sebastian Boyd

Chile’s peso headed for its first weekly gain in three weeks as higher copper prices signaled a larger trade surplus for the biggest producer of the metal.

The peso strengthened 0.3 percent to 483.55 per U.S. dollar as of 10:49 a.m. in Santiago, extending an increase for the week to 0.6 percent.

Stocks rose in Europe after Vinci SA, Europe’s largest builder, reported first-quarter sales that beat analysts’ estimates. Copper for July delivery gained as much as 1.2 percent to $3.8185 a pound on the Comex in New York after stockpiles fell.

“We have seen copper rise from $3.6 a pound,” said Alejandro Araya, a currency trader at Banco Santander Chile in Santiago. “There’s been some corporate dollar selling from mining companies that need pesos to finance spending on machinery and salaries.”

Copper accounts for half of Chile’s exports. Stockpiles monitored by the London Metal Exchange are at the lowest level since November 2008 and those tracked by Shanghai’s exchange are the lowest in more than two months.

Local investors trimmed their long peso position in the forwards market to $16 billion on April 25 from $16.5 billion a day earlier. Offshore investors had a $6.9 billion short position, little changed from $7 billion a day earlier, according to data published today by the central bank.

Swaps markets and inflation forwards were little changed after an increase in corporate tax and a cut in income tax announced by President Sebastian Pinera last night.