MercoPress. South Atlantic News Agency

US dollar in Chilean market keeps sliding and closer to $ 490

With the US dollar operating in the Chilean Money exchange market below the 500 pesos benchmark, and still sliding, the Chilean Central Bank decision to leave the basic rate unchanged came as a relief.

At the end of Friday operations the spot exchange rate between Santiago banks stood at 496 Chilean pesos to the US dollar, having recovered from Thursday's 493 Chilean pesos to the US currency. At this value the Chilean peso has appreciated 6.67% so far this year and contrasts with the 3.95% appreciation for the whole of 2006. "With the interest rate incognito unveiled, we have an element less of pressure on the US dollar, and some operators returned to the market to retake their (US dollar) positions which they sold in past weeks", said a Santiago money exchange operator. On Thursday following the monthly meeting of the Monetary Board the Chilean Central Bank decided to keep the basic rate unchanged at 5.75%, thus leaving the one percentage point differential with the US dollar rate unmoved, which was one of the causes behind the sustained appreciation of the Chilean currency that is also benefiting from record prices for copper, the country's main export. However other exporters exposed to rising costs in Chilean pesos and sliding income because of the weaker export dollar are pressing for a quick reversal to the situation. "Anyhow the US dollar remains weak globally and therefore the local (Chilean) market next week can be expected to remain in the 495 to 498 pesos range", indicated bank sources in Santiago, "but we shouldn't be surprised if it drops below 490 pesos". Friday electronic money operations totaled 1.175 billion US dollars in the Santiago banking system, a slight increase over Thursday's 1.140 billion. Last Monday the Chilean peso pierced the 500 units to the US dollar benchmark recovering levels of eight years ago (1999).