Latin America Currencies: Chilean Peso Gains as Copper Rises

By Andrea Jaramillo

Nov. 10 (Bloomberg) -- Chile's peso strengthened as copper, the nation's biggest export, surged after China unveiled a $586 billion plan to shore up growth in the world's fourth-largest economy.

The peso rose 1.7 percent to 626.35 per U.S. dollar at 8:52 a.m. New York time, from 637.02 on Nov. 7. The currency touched 611.9 on Nov. 6, its highest level since Oct. 20.

China announced infrastructure spending, tax deductions and farming subsidies, helping sustain global growth and demand for raw materials as economies in the U.S. and Europe slump.

``Since a good part of the stimulus plan from China points to infrastructure projects, we'll likely see boosted demand for copper,'' said Juan Pablo Castro, an economist at Banco Santander SA in Santiago. ``That's great news for Chile.''

China accounts for about a quarter of the world's copper usage and about a third of aluminum, zinc and lead, according to Citigroup Inc. Copper for delivery in three months gained $320, or 8.5 percent, to $4,075 a metric ton by 12:02 p.m. in London.

The yield for a basket of Chilean five-year peso bonds in inflation-linked currency units, called unidades de fomento, rose 1 basis point to 3.37 percent, according to Bloomberg composite prices.

Other Latin American currencies also gained following the rally in commodity prices, including oil, the biggest source of dollar revenue for Venezuela, Ecuador and Colombia.

Colombia, Argentina

Crude oil for December delivery climbed 7 percent to $65.31 a barrel in electronic trading on the New York Mercantile Exchange.

Colombia's peso jumped 1.6 percent to 2,268.6 per dollar, from 2,304.85 on Nov. 7, according to the Colombian foreign- exchange electronic transactions system, known as SET-FX.

The yield on Colombia's benchmark 11 percent bonds due in July 2020 fell 24 basis points, or 0.24 percentage point, to 12.55 percent, according to the stock exchange. The price surged 1.322 centavo to 90.610 centavos per peso.

In Argentina, the peso was little changed at 3.3045 per dollar, from 3.3044 on Nov. 7.

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net