The US dollar closed in Chile at its highest in two months last week, 531 pesos, following the continuous drop in copper prices, the country's leading export.
With only a week before the end of 2006, the Chilean peso accumulates a depreciation against the US dollar of 3.79% which contrasts with the 8.5% appreciation of 2005. "The Chilean peso is suffering from the fall in copper's international prices, in spite of the fact that we won't actually see less US dollars coming into Chile until the second half of 2007", said Raul Toro a money market analyst in Santiago. Last Friday copper dropped to 2.89 US dollars a pound compared to 2.91 the previous week and 3.40 just a couple of months ago. However analysts also pointed out that last Friday was not a "typical" working day given the beginning of Christmas festivities. On a normal day foreign money transactions range between 650 and 750 million US dollars and last Friday totaled 367 million US dollars. Forward 7 and 42 days operations ranged 531.5 and 532.7 Chilean pesos per US dollar. An appreciation of the Chilean peso, even modest, is considered positive by most non-mineral exporters who have seen their profit margins drop dramatically as costs (in Chilean pesos increase) and income (in US dollars) erodes. This in spite of the fact that a strong Chilean peso boosts consumers' incomes.