04 January 2011
Chile central bank to buy US$12b
SANTIAGO: Chile's central bank on Monday announced plans to buy 12 billion US dollars to soften the effects of exchange rate fluctuations, in its first market intervention since April 2008.
With the dollar at a 31-month low, the bank said it would start buying greenbacks from January 5 in a purchase that could stretch through December.
The news came after the dollar hit a low of 466 Chilean pesos. The greenback lost 7.8 percent against the peso in 2010, one of its worst showings in the region.
The peso has meanwhile strengthened on the back of the rising price of copper, Chile's main export.
And the pricier peso is not good news for exporters whose goods are more expensive to foreign buyers; almost 65 percent of Chile's domestic product is derived from export sales.
"What we are doing ... is supporting domestic producers, (mainly) our exporters, in the farm as well as industrial sectors who depend on exchange rates," Finance Minister Felipe Larrain said after the announcement.
"We think it is a well-targeted step that is going to have an effect on the exchange rate, which will be seen, certainly, from tomorrow," Tuesday, he explained.
Chile central bank to buy US$12b
SANTIAGO: Chile's central bank on Monday announced plans to buy 12 billion US dollars to soften the effects of exchange rate fluctuations, in its first market intervention since April 2008.
With the dollar at a 31-month low, the bank said it would start buying greenbacks from January 5 in a purchase that could stretch through December.
The news came after the dollar hit a low of 466 Chilean pesos. The greenback lost 7.8 percent against the peso in 2010, one of its worst showings in the region.
The peso has meanwhile strengthened on the back of the rising price of copper, Chile's main export.
And the pricier peso is not good news for exporters whose goods are more expensive to foreign buyers; almost 65 percent of Chile's domestic product is derived from export sales.
"What we are doing ... is supporting domestic producers, (mainly) our exporters, in the farm as well as industrial sectors who depend on exchange rates," Finance Minister Felipe Larrain said after the announcement.
"We think it is a well-targeted step that is going to have an effect on the exchange rate, which will be seen, certainly, from tomorrow," Tuesday, he explained.
