Chilean peso declines after Vergara remarks on capital controls – SteelGuru

Chilean peso declines after Vergara remarks on capital controls – SteelGuru

 Chile’s peso slid after central bank President Rodrigo Vergara raised the prospect of capital controls to mitigate the flood of dollars from the US Federal Reserve’s quantitative easing program. The peso depreciated 0.1% to 471.25 per dollar. It had earlier appreciated to 468.35 per dollar as copper gained in New York.

Fed Chairman Mr Ben S Bernanke’s plan to fight unemployment by buying USD 40 billion of mortgage bonds a month may mean emerging market currencies appreciate, producing imbalances in small open economies. While Chile’s central bank can buy dollars or introduce capital controls, premature intervention risked being ineffective.