Chile cbank eyes peso rally inflation impact-minutes

SANTIAGO Nov 27 (Reuters) - Chile's central bank is keeping a close eye on the sharp appreciation of the peso and its inflationary implications, according to minutes of the bank's November monetary policy meeting published on Friday.

The bank held its benchmark interest rate steady at 0.50 percent at its rate-setting meeting on Nov. 12, when it said it would relax complementary stimulus measures, but hinted at a more gradual recovery in the economy of the world's top copper producer.

In the interim, Central Bank President Jose De Gregorio warned the bank could intervene in the future to curb peso strength after it rallied around 30 percent against the U.S. dollar this year to flirt with 17-month highs.

"All of the board members underlined the appreciation of the peso in recent weeks, pointing out that it was in part due to the international depreciation of the dollar, and that its implications for inflation should be monitored closely," the banks's meeting minutes released on Friday said.

The peso CLP=CL has been one of the highest-performing emerging market currencies this year against a weaker dollar.

The peso weakened early Friday at about 500 per dollar as the U.S. currency posted broad gains. Investors sought to limit risk exposure on concern about Dubai's debt woes.

The central bank said last week the economy likely contracted 1.3 percent in the third quarter from a year ago because of lower industrial activity.

It said the economy likely expanded 5.3 percent in the third quarter compared with the second quarter, however, signaling the start of a recovery from the global economic crisis. (Writing by Simon Gardner; Editing by Padraic Cassidy) ((simon.gardner@thomsonreuters.com; Tel: +562-370-4250; Reuters Messaging: simon.gardner.reuters.com@reuters.net))