UPDATE 1-Chile worried by peso strength; finmin, cbank to talk
* Strong economic growth, rates have strengthened peso * Gov't says worried about Chile competitiveness * Cbank intervened in 2011 to stem peso rise * Peso weakens following finance minister's comments By Felipe Iturrieta SANTIAGO, Jan 8 (Reuters) - Chile is worried about the peso's strength and its effect on exports in the commodities-dependent country, Finance Minister Felipe Larrain said on Tuesday, adding he was to meet with the central bank this week to analyze the currency's appreciation. The peso, which has been boosted by Chile's robust economic growth and healthy prices for top export copper, ranked among the strongest foreign currency performers against the U.S. dollar among 152 currencies tracked by Reuters in 2012. "The government is worried about the exchange rate's competitiveness ... we're looking for various ways to better the competitiveness of the export sector and we're cooperating via fiscal policy to avoid further currency appreciation," Larrain told reporters. "We're going to continue our very coordinated work with the central bank, and we'll probably have a coordination meeting this week," he added. Chile's peso was trading around 470 pesos per dollar in morning Tuesday trade, but weakened to around 471.40 per dollar following Larrain's comments. "Larrain's comments may have triggered (the change), because the peso was advancing and from one moment to another dollar purchases began around 470 (pesos)," said Gloria Soto, trader with FXCM Chile in Santiago. It has appreciated roughly 8 percent this year. Analysts say that if the peso strengthens to around 465 per dollar, the risk of the central bank intervening in the currency market increases. Last month central bank president Rodrigo Vergara reiterated that intervening in the local peso currency market was a tool at the bank's disposal, but that if it hadn't intervened so far it was because it hadn't been deemed "necessary." The central bank deployed a dollar-purchasing program in 2011 to curb peso strength after it appreciated to its highest level in more than 2-1/2 years at 465.50 per dollar. The bank has kept rates steady since a surprise cut in January 2012, as it weighs external risks against a buoyant domestic economy. Chile's small, export-dependent economy has mostly fared better than expected despite slowing demand from top trade partner China and fallout from the euro zone crisis, thanks to robust domestic demand and investment.
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