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Chile finance minister would support cbank intervention on peso
January 26, 2013 / 9:36 AM / 5 years ago

Chile finance minister would support cbank intervention on peso

* Peso boosted by strong Chile growth, copper
    * Chile's central bank last intervened in 2011
    * Larrain sees emerging markets remaining strong

    DAVOS, Switzerland, Jan 26 (Reuters) - Chile's government
would support any intervention by the country's independent
central bank to weaken the strong peso, Finance Minister Felipe
Larrain said on Saturday.
    "The central bank may decide to intervene but it is their
own decision ...if they do, we would certainly support them,"
Larrain told Reuters in a television interview at the World
Economic Forum in Davos.
    "We're trying to prevent further appreciation," he said. 
    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.
    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
    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.
    Larrain said it was hard to counter the weight of U.S.
quantitative easing: "Against this massive QE, we have a few
tools but not many."
    Chile's central bank has kept rates steady since a surprise
cut in January 2012, as it weighs external risks against a
buoyant domestic economy. 
    Due to robust domestic demand and investment, Chile's small,
export-dependent economy has for the most part fared better than
expected despite slowing demand from top trade partner China and
fallout from the euro zone crisis.
    Larrain added that the global economic picture was somewhat
rosier at this year's Davos than in 2012.
    "We're not yet out of the woods. The real economy still
needs to undergo some tough work and the financial markets are
helping but it's not to say this is over," Larrain said.
    "It is the emerging markets that will continue pulling the
world economy again in 2013."

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