Bloomberg reported that Chile’s peso weakened for the first time in 4 days as investors shunned riskier, emerging market assets including copper the country’s biggest export. The peso slid 0.3% to 480.05 per US dollar from 478.86 on February 3rd 2012 retreating from 6 straight weekly gain.

Copper for March delivery weakened as much as 1.9% on concern the European debt crisis may weaken economic growth in China, the biggest buyer of the metal. European stocks and the euro declined as Greek politicians fought to reach a deal on spending cuts and German Chancellor Ms Angela Merkel warned them time was running out. The peso gained briefly after data showed Chilean economic growth exceeded estimates in December.

Mr Matias Madrid chief economist at Banco Penta in Santiago said that “This is external news because the local news points the other way. It’s copper and the uncertainty because Greece hasn’t reached a deal yet. The activity data implies the central bank will hold rates, which should support the peso.”

Mr Madrid doesn’t expect much reaction from the interest-rate swaps market to the activity data given that the likelihood of a central bank pause was already priced in.

(Sourced from Bloomberg.net)