Chilean Peso Hits Nine-Month High on Foreign-Exchange Selling Plan

A Chilean government plan is likely to continue to push the national currency up, as it will sell $40 million daily in the Foreign-Exchange market, boosting confidence for the South American currency.

The Chilean government affirmed in June 15 that a plan for economic stimulus will sell $4 billion dollars in $40 million allotments, as an effort to increase the influx of international assets to the South American economy. The current $4 billion program will follow a previous one which started in March offering daily $50 million in the forex markets. The Chilean peso has been favored since the global slump eased in the beginning of April, which resulted in a risk appetite rally for emergent-markets currencies, and like in Brazil, being Chile an emergent commodity exporter economy, the national currency witnessed sharp gains supported by the new wave of optimism in equities markets.

Economists agree that the Chilean government dollar sell plan is the main factor weighing positively to the national currency, it is likely that as long as plans like this will follow, investors will be confident enough to maintain the Chilean peso at high levels or even increase its gains. High-yielding currencies have been favored by a new wave of confidence on world markets, but since a cloud of confusion started to appear among traders, it is hard to determine whether high-yielding currencies will still continue their present climb.

USD/CLP traded at 538.85 as of 12:24 GMT rising from yesterday’s rate of 551.26.

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