August 29, 2017 / 5:10 PM / a year ago

EMERGING MARKETS-Chile peso touches 2-year high vs dollar as copper soars

    By Bruno Federowski
    SAO PAULO, Aug 29 (Reuters) - The Chilean peso on Tuesday
hit the strongest level in over two years as prices of copper
soared, lifted by falling global inventories of the base metal,
a key Chilean export.
    Benchmark copper futures touched levels last seen in
September 2014, extending the previous week's gains.
    Also helping underpin the copper rally was a depreciation of
the dollar against a basket of major currencies after
North Korea launched a missile that flew over northern Japan,
fueling global risk aversion.
    A weaker greenback generally makes dollar-priced metals
cheaper for non-U.S. investors, boosting demand.
    The Chilean peso strengthened 0.5 percent to 625
per dollar, leading gains among currencies in Latin America.
    "We may start to see technical corrections toward 640, but
in general barring a copper collapse, the peso is heading for an
under-650 closing for the year," 4Cast strategists wrote in a
client note.
    The stronger peso fostered expectations of downward pressure
on inflation, fueling bets that the central bank will further
cut interest rates over the coming months.
    Other regional currencies seesawed as escalating
geopolitical tensions kept investors at bay. 
    The Mexican peso slipped about 0.2 percent, but
traders refrained from pushing it even lower following its
biggest loss since April on Monday.
    In Brazil, the real dipped while the benchmark
Bovespa stock index was near flat. 
    Shares of Centrais Elétricas Brasileiras SA were
the biggest decliners as traders booked profits after a recent
rally triggered by a plan to privatize the state-controlled
power utility.
    Rising shares of power utility Cia Energética de Minas
Gerais SA helped to offset that pressure as it took
further steps to sell its stake in Light SA.

    Key Latin American stock indexes and currencies at 1720 GMT:
 Stock indexes                    Latest        Daily     YTD
                                                  pct     pct
                                               change  change
 MSCI Emerging Markets              1,081.44    -0.34   25.84
 MSCI LatAm                         2,866.67    -0.44   23.01
 Brazil Bovespa                    71,051.98     0.05   17.97
 Mexico S&P/BVM IPC                51,226.60    -0.08   12.23
 Chile IPSA                         5,155.79     -0.3   24.19
 Chile IGPA                        25,734.57    -0.28   24.12
 Argentina MerVal                  23,432.35    -0.21   38.51
 Colombia IGBC                     10,906.58     0.11    7.69
 Venezuela IBC                    211,166.19     2.17  566.03
 Currencies                           Latest    Daily     YTD
                                                  pct     pct
                                               change  change
 Brazil real                          3.1691    -0.23    2.53
 Mexico peso                         17.9045    -0.18   15.86
 Chile peso                           625.15     0.53    7.29
 Colombia peso                      2,945.23     0.04    1.91
 Peru sol                              3.242    -0.12    5.31
 Argentina peso (interbank)          17.3400    -0.61   -8.45
 Argentina peso (parallel)             18.26     0.27   -7.89
 (Reporting by Bruno Federowski, editing by G Crosse)
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