(Adds central bank’s comment on labor market, background)
SANTIAGO, Dec 18 (Reuters) - Chile’s central bank has no plans to intervene in the foreign exchange market, the bank’s chief said on Thursday, even though Chile’s peso has depreciated more than 14 percent versus the U.S. dollar this year, among the steepest declines in emerging markets.
“We have a floating exchange rate policy and as such it isn’t part of the central bank’s normal policy to intervene in the currency market, and the truth is that we’re not even close to thinking about doing it,” central bank Governor Rodrigo Vergara said.
Among the world’s 36 most-traded currencies, Chile’s peso has posted the seventh biggest drop versus the greenback in 2014, according to Reuters data.
“We believe the peso’s recent depreciation is a way to adjust to the new international scenario Chile’s economy faces,” Vergara told journalists.
The economy of the world’s top copper producer has been slowing for several quarters, hampered initially by stagnating investment, most notably in the mining sector, with the slowdown compounded by falling consumption.
Growth in 2014 will likely be 1.7 percent, a five-year low, the bank forecast recently. That compares with growth of 4.1 percent in 2013.
Despite cooling economy, the labor market has remained in better shape than many had feared. The jobless rate for the August to October period fell to 6.4 percent from 6.6 percent in September to July.
But Vergara cautioned the labor market could still feel the effects of the slowdown.
“There is a lag between what happens with economic activity and what happens in the labor market ... and so we may see an additional deterioration in the labor market in the coming months due to the lower growth in the economy.” (Reporting by Felipe Iturrieta; Editing by Peter Galloway; Writing by Anthony Esposito; Editing by Chizu Nomiyama)