MercoPress. South Atlantic News Agency

Chilean Senators warn about ‘social impact’ of cheap US dollar for farm areas

The Central bank and Piñera “haven’t done a thing”

Senators representing agricultural parts of Chile strongly criticized the Central Bank and President Sebastian Piñera this week for turning a deaf ear to the “social, cultural and economic problems” created by the falling value of the US dollar, now hovering at 470 pesos to the dollar.

The senators insisted that the Central Bank and Piñera “haven’t done a thing” to deal with the problem.

The senators said that Chile’s export oriented agricultural sector is tremendously stressed and urged Piñera to deliver on his campaign promise to implement financial policies that foment a high-valued U.S. dollar. The senators noted that profits from agricultural industries largely stay in the country and create more wealth here, while profits from Chile’s mining industry–now mostly foreign-owned – are normally recycled outside of Chile.

Chile’s copper mining industry is booming, with strong world demand – especially from China – pushing the red metal’s value to record heights well over US$4 per pound.

Central Bank President Jose de Gregorio responded to his critics, saying the Central Bank has no preconceived dogmas about taking measures to help prop up the value of the dollar.

Gregorio urged his critics to also consider how well the country has weathered the recent international financial crisis compared to other parts of the world. Most analysts predict 5 to 7% growth for Chile in 2011.

By Steve Anderson – Santiago Times