The Chilean peso closed at an eight-month high against the U.S. dollar Friday, after recovering from an early session tumble.
The peso ended the session at CLP559.00 to the dollar, compared with CLP561.80 the previous session, after moving in a CLP558.50 to CLP562.30 range.
The peso opened weaker on the consumer price and industrial production data released in the U.S., traders said.
It then turned around before midday, firming in a very liquid market, traders said. Institutional investors, including private pension fund managers, were seen selling dollars on the local market.
In its daily dollar sale on behalf of the Finance Ministry, the Central Bank of Chile auctioned $50 million at a weighted average rate of CLP558.68. The bank doesn’t release information on which banks bid on the dollars or in what amounts.
The Finance Ministry is selling $50 million a day for a total of $3 billion to partially finance programs in its $4 billion fiscal stimulus package. The funds to be sold are drawn from one of the country’s two sovereign wealth funds.
In the local bond market, yields on Chilean central bank bonds, or BCUs, ended higher in an extended reaction to the central bank president’s comments the previous session that the bank won’t likely take additional quantitative measures to boost the economy, traders said. Some analysts were betting the bank could buy back longer-term bonds once it ends its monetary easing cycle.
The yield on inflation-indexed five-year BCUs ended at 2.70%, from 2.57% Thursday, while the yield on 10-year BCUs ended at 3.11%, from 2.93% Thursday.
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