MercoPress. South Atlantic News Agency

Chilean peso at a four month high against US dollar

The Chilean peso hit a new four-month high on Wednesday, driven higher as banks and pension funds sold dollars to buy local bonds, while stocks retreated ahead of a likely aggressive central bank rate cut.

Chile's peso broke through the 600 pesos to the dollar mark, closing 1.17% firmer at 597.50/598.00 per US dollar compared to Tuesday's close of 604.50/605.00. "Local investors are liquidating their dollar positions to invest in local paper, betting a spike in inflation in March will make (bonds) more profitable" one trader said. Stocks bumped from positive to negative territory on Wednesday as investors bet on how much the central bank will cut its benchmark interest rate this week to stimulate the economy amid a slowdown and as inflation eases. The central bank's monthly economic outlook poll of 27 analysts, academics and executives published this week forecast the bank would cut its benchmark rate by 100 basis points for a second month running to 6.25% at Thursday's monetary policy meeting.