MercoPress. South Atlantic News Agency

Chile’s share-index advanced 51% in 2009; Peso 26% stronger

Utility, retail and commodities shares pushed the market to its highest annual advance in 16 years

Chile's leading share index ended 2009 with an annual gain of 51% as utility, retail and commodity stocks fuelled the biggest annual rise in 16 years. At the same time, Chile's currency, the peso ended with a 26% annual advance against the dollar, traders said.

The blue-chip IPSA index advanced for a fifth consecutive session to close 0.51% higher at 3,581.42 points, an all-time closing high, after the government said industrial output rose a surprise 1% in November as the economy exits its first recession since the Asia crisis.

IPSA thus redressed the 22.13% drop of 2008, the worst since 1998, when the Asian crisis which saw the index plunge 22.63%.

Chile's stock market will close on Thursday and Friday for the New Year's holidays. Trade will resume on Monday Jan. 4.

Chile's peso rose 0.1% as companies bought dollars to close year-end positions. The peso closed at 507.00/507.50 per US dollar. That means the peso has appreciated 26% in 2009, boosted by wider dollar weakness, the closing out of carry trades and a sharp rise in prices for the country’s number one export copper, and offsetting 22% depreciation in 2008.

The peso hit 17-month highs in November, boosted by wider dollar weakness. That prompted the central bank to warn of possible intervention, but peso strength has eased in recent weeks.

Analysts expect the peso to trade in a range of around 490 to 520 per dollar in the first part of next year. They say the exchange rate would depend on the trajectory of rising copper prices and how the dollar fares abroad, as well on what happens to interest rates, currently at historic lows.