Chile's Peso Rises as Global Rate Cuts, Stocks Spur Investors

By Drew Benson

Nov. 4 (Bloomberg) -- Chile's peso jumped as a global rally in stocks and central bank interest-rate cuts sparked investor appetite for higher-yielding, emerging-market assets.

The peso rose 2.9 percent to 644.75 per dollar at 9:21 a.m. in New York, from 663.24 yesterday.

U.S. stock-index futures advanced after MasterCard Inc. reported better-than estimated earnings. The MSCI World Index, a gauge of stocks in 23 developed nations, advanced 1.6 percent to 976.45, gaining for a sixth day.

The Reserve Bank of Australia cut borrowing costs 0.75 percentage point, more than economists forecast. The Bank of England and European Central Bank are expected to reduce interest rates a half-percentage point when they meet on Nov. 6.

The yield on a basket of five-year Chilean peso bonds in inflation-linked currency units slid 4 basis points, or 0.04 percentage point, to 3.25 percent, according to Bloomberg composite prices.

In Argentina, the peso rose 0.3 percent to 3.3755 per dollar, from 3.3855 yesterday.

The central bank bought pesos yesterday and announced a rule change that extends the waiting period to three days for investors who try to move cash out of the country by buying stocks and bonds in the local market and then selling them abroad for dollars.

The change ``played an important role in putting the breaks on'' the peso's slide, said Carlos Lizer, head currency trader at Buenos Aires-based brokerage Puente Hermanos.

Demand for dollars picked up after President Cristina Fernandez de Kirchner on Oct. 21 announced a plan to nationalize Argentina's 10 private pension funds with portfolios worth about $26 billion. Congress must approve the measure and a Lower House vote is expected this week.

To contact the reporter on this story: Drew Benson in Buenos Aires at Abenson9@bloomberg.net