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Chilean Peso Profits from Earthquake Damage

April 1, 2010 at 21:16 by Vladimir Vyun

Chilean pesoThe Chilean peso gained, cutting its losing streak, which it experienced for three weeks, on speculation that the government and insurers may start selling dollars, to pay for fixing the damage caused by the earthquake with a magnitude of 8.8 magnitude.

The Chile’s government is required to pay more than $9 billion from $30 billion needed for the reconstruction, which it plans to raise by selling bonds in dollars and also by using its copper savings, totaling approximately $11 billion. Copper export by Chile increased as much as 5.4 percent this week, further adding to the value of the nation’s currency. Copper is the main exporting good of the country.

Analysts state that, while not all of the details of the possible measures taken by the Chilean government to repair the damage, caused by the earthquake, are certain, most probable options to raise the necessary money is by selling assets and using savings. The selling of the dollar and the copper gains should keep the currency bullish.

USD/CLP traded near 521.50 as of 19:10 GMT — up from 524.50 at yesterday’s close.

If you have any questions, comments, or opinions regarding the Chilean Peso, feel free to post them using the commentary form below.

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