Bloomberg reported that Chile’s peso hit 2 week low as copper fell after the US Federal Reserve failed to announce measures to spur growth and on concern the continuing crisis in Europe will sap demand for the metal used in new homes and cars.

The peso fell 0.4% to 517.80 per US dollar from 515.5. It reached 517.95 per dollar earlier its weakest level this month. The Bloomberg JPMorgan Latin American currency index fell 0.4%. The dollar index which measures the strength of the greenback against major trading partners, reached the highest since January.

The price of copper which makes up more than half of Chile’s exports declined as much as 2.8% to the lowest since November 30th 2011 eroding the value of the peso. The euro fell below USD 1.30 for the first time since January as Italian borrowing costs increased at a debt auction and European stocks declined.

Mr Andres de la Cerda money markets trader at Bice Inversiones said that “Its copper and Europe. The euro broke through an important floor it had because of uncertainty and the lack of a light at the end of the tunnel. The longer it takes before we see some kind of concrete measures the worse things are going to get.”

Federal Reserve policy makers said that the US economy is maintaining its expansion even as the global economy slows, while refraining from taking new actions to lower borrowing costs.

The Chilean central bank yesterday left its benchmark rate unchanged at 5.25% in line with economists’ forecasts. Traders had been pricing in possible quarter percentage-point cut. Offshore investors in the Chilean peso forwards market had USD 5 billion short position in the currency against the US dollar on December 12th 2011.

(Sourced from Bloomberg.net)