MercoPress. South Atlantic News Agency

Copper “armored” Chilean peso sets new record

Chile's peso climbed to its strongest against the US dollar in more than five years after the government reported that exports of copper, the country's biggest export, surged in October and prices for the metal kept breaking records.

Copper exports from Chile, the world's biggest producer of the metal, rose in October for a fifth month from a year earlier. Copper prices have gained 42% in 12 months, increasing inflows of revenue and pushing the peso up against the dollar.

The peso is "relatively undervalued still"' said Miguel Santana, an economist at the Bank of Santander in Santiago.

The currency rose 0.7% to 523.95 pesos per dollar at 10:56 a.m. New York time from 527.75 late Monday and earlier rose as much as 0.9% to 523.20, its strongest since June 2000, at 521.20. In the last 12 months, the peso is up 13.1% while in 2005 to date, it is up 6.1%.

The peso is forecasted to continue its advance and could reach 500 pesos per dollar, as the country posts a trade surplus of up to 9 billion US dollars, gross domestic product expands at least 6% and copper prices remain at record highs.

Over the last 12 months, the price of copper has gained more than 54 cents per pound, rising from $1.3875 per pound to as high as $1.9595 per pound Tuesday.

For each cent rise in the price of copper Chile obtains a surplus of between 100 and 120 million US dollars.