UPDATE 2-Chile acts to help exporters hit by strong peso

* Finmin says measure key to control currency effects

* Market says measure weak, not see immediate impact

* Gov’t to continue analyzing other measures

(Adds analyst comment and background)

By Felipe Iturrieta and Alonso Soto

SANTIAGO, Oct 21 (BestGrowthStock) – Chile will cut red tape on
customs to help exporters hit by a strong peso as one measure
to ease the effects of the currency’s rapid appreciation,
Finance Minister Felipe Larrain said on Thursday.

“This was one of the main measures that we had planned for
this week because this is a measure that takes into
consideration the exchange rate problem that we are facing,”
Larrain told reporters at a customs office in the outskirts of
Santiago. “This is not the last measure, we will keep analyzing

Larrain said the move, which was not as strong as many
analysts expected, added to tight control over fiscal spending,
use of copper savings and offering dollar credits to help
exporters whose profits have dwindled because of the stronger

“This sort of announcement has no effect,” said a currency
trader in Santiago. “What the market was awaiting for was
concrete measures. This was no good, and that’s why the the
dollar fell again.”

The Chilean peso (CLP=CL: ) on Thursday pared some early
losses triggered by the government announcement of possible
foreign exchange measures. The peso was 0.19 percent weaker at
485.30/485.80 per dollar.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a TAKE A LOOK on Chile's economy, peso [ID:nN30113748] For SCENARIOS on possible Chile forex moves [ID:nN20224723] For a Latam forex graphic, see http://r.reuters.com/qaq49p For a Chile forex graphic, see http://r.reuters.com/raq49p FACTBOX on steps to counter hot money [ID:nSGE69503F]


Chile has not yet followed the steps of other Latin
American countries that have intervened in the market to temper
their local currencies, which are rapidly appreciating on the
back of greater capital inflows.

Investors chasing high interest rates provided by
fast-growing emerging economies have swamped these countries
with dollars, pushing up the value of local currencies.

Chile’s central bank has also allayed market talk of a
currency intervention in the short-term.

“Chile’s different approach is sure to attract attention.
If this does help exporters ride things out until the peso
loses some power, then others could follow suit,” said
IGM-EMERG in a note to clients.

Tensions over currencies and economic imbalances have
already surfaced one day before a gathering of finance
ministers from the Group of 20 rich and emerging nations gather
in South Korea. [ID:nN21252058]

Brazil, which has raised taxes on local bond purchases by
foreigners twice this month to rein in the real, on Thursday
urged the United States to make the currency issue a top
priority at the G20 meeting. [ID:nN21289476]

The Chilean peso has strengthened around 12 percent against
the dollar since the end of June, prompting demands for action
by exporters hit by rising costs.
(Reporting by Felipe Iturrieta and Alonso Soto; Editing by
Andrew Hay and Padraic Cassidy)

UPDATE 2-Chile acts to help exporters hit by strong peso