By James Attwood and Nathan Gill
Aug. 17 (Bloomberg) — Chile’s peso fell to a two-month low after copper, the country’s biggest export, declined and the U.S. dollar strengthened against major currencies.
Chile’s currency, up 14 percent so far this year, dropped 1.3 percent to 558.75 per U.S. dollar at 12:01 p.m. New York time, from 551.72 on Aug. 14. Earlier it touched 559.87, the weakest since June 15. Peru’s sol fell 0.6 percent to 2.9633 per dollar, from 2.9470 at the end of last week. Markets in Argentina and Colombia were shut today for a holiday.
“We see a global chain of depreciation in currencies which is basically affecting emerging markets that are important producers of commodities,” Alfredo Coutino, director for Latin America at Moody’s Economy.com in West Chester, Pennsylvania, said today in a telephone interview.
Copper, which accounts for almost 38 percent of Chile’s gross domestic product, led industrial metal declines as stockpiles expanded and concerns increased that a doubling in prices since January no longer reflects the outlook for demand. Chile said today that the value of its exports of the metal last month fell 22 percent after prices declined.
The Reuters/Jefferies CRB Index of 19 raw materials fell 1.4 percent as the dollar rose, limiting investors’ need to use commodities as a hedge against inflation. Equities tumbled after foreign direct investment in China fell, Yunnan Copper Industry Co. said there were “no clear signs” of a recovery and Japan’s economy grew less than economists estimated.
The value of Chilean copper exports dropped to $2.54 billion in July from $3.25 billion a year earlier, the country’s central bank said today in a report published on its Web site. Chile is the world’s largest copper producer.
Peru’s economy contracted 2.1 percent in June from the same month a year earlier, the government said today. Analysts had forecast a contraction of 2 percent, according to the median estimate of 10 economists surveyed by Bloomberg.