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Chinese Default Makes Chilean Peso Worst Performer on FX Market

March 8, 2014 at 6:47 by Vladimir Vyun

Some Chilean peso banknotesThe Chilean peso sank yesterday, being the worst performer on the Forex market, as copper prices slumped after the news about a company default in China. It spurred fears and drove investors away from raw materials and commodity-related currencies.

Shanghai Chaori Solar Energy Science & Technology was unable to repay interest on its bonds. It was the first default of a Chinese company in history, and it sparked concerns that more defaults may follow.

The news hurt industrial metals very hard, particularly copper as China is the biggest consumer of the metal in the world. This, in turn, damaged the prospects for Chile’s economy as copper accounts for about a half of country’s export revenue. The peso reached the weakest price since June 2009 against the US dollar.

USD/CLP advanced from 558.45 to close at 566.05 and EUR/CLP rose from 773.8750 to 785.0250 yesterday.

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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