MercoPress. South Atlantic News Agency

Strong rebound of the Chilean peso

A record drop experienced the US dollar in Santiago's money markets with the exchange rate going from 700 to 680 pesos in just two weeks.

This is the strongest rebound of the Chilean peso against the US dollar since June 19 of last year.

Santiago analysts indicated that a bullish market for copper, the drop in oil prices plus a greater optimism regarding the recovery of the Chilean and world economies have had a decisive impact in consumers and investors attitudes.

"Oil has fallen 7%, copper is up 2,5%, this means a lesser cost for our main import and more income from our main export commodity", said César Pérez Novoa from Celfin Capital.

Other good news this week were the signing by President Bush of the US-Chile free trade agreement and a further drop in the Chilean country risk that reached a historic minimum of 102 points.

The country risk is defined as the spread (interest rate difference) between a sovereign debt bond of a country and United States Treasury bonds considered the safest and most trusted of the world.

The JP Morgan Bank country risk ranking makes Chile the most attractive country in Latinamerica for investment. Behind come Mexico with 214 points; Peru, 358 and Colombia, 399.

Brazil' country risk last January stood at 1,446 points and has gradually dropped to 687. Defaulted Argentina that still has to reach an agreement with creditors figures as the less attractive to invest or lend, with a country risk of 5,198 points.

Exchange brokers in Santiago said that 680 pesos for the US dollars seems to be the equilibrium point at the moment. However, in coming weeks the appreciation of the Chilean peso could continue and the American greenback would then drop further, maybe "in the range of 660 pesos", said Carlos Serrano from Finanzas Today.