MercoPress. South Atlantic News Agency

Implementation of Chilean stimulus plan boosts Peso

The Chilean peso surged on Tuesday following the announcement the government would sell US dollars on the local market to finance a massive fiscal stimulus package. The peso closed at 603.30/603.80 per dollar compared to Monday's 624.00/624.50 per dollar.

On Monday the government said it would auction 50 million dollars a day starting March 2nd to fund 3 billion of a previously announced 4 billion US dollars fiscal plan to stimulate the economy in the face of the global economic slowdown. "The news hit immediately because it caught the whole market having bought dollars, so the sale of dollars won't wait," said one trader. "The trend is for the peso to keep rising, even though the plan has not started yet, given expectations of the huge amount of dollars which are going to come into our market" he added. So far this year the Chilean peso has recovered ground against the US dollar, 6.24% compared to the depreciation of 22.3% during the twelve months of 2008. Electronic transaction in the exchange market soared to 944 million US dollars on Tuesday from 673 million on Monday. Meanwhile Chilean stocks fell for a second day in a row, led downward by commodity and raw material shares.