UPDATE 3-Chile cenbank warns of risks of global imbalances

* De Gregorio says peso rise lower in “multilateral terms”

* Adds global imbalances risk to capital flows, currencies

* President says working to increase investment abroad
(Adds Pinera comment on capital accounts and background)

SANTIAGO, Oct 25 (BestGrowthStock) – The sharp appreciation of
Chile’s peso (CLP=CL: ) is comparable to that of other currencies
in nominal terms, Central Bank President Jose De Gregorio said
on Monday, as he warned of risks from global macro-economic
imbalances.

Low interest rates in developed economies have increased
capital flows into emerging countries such as Chile, De
Gregorio told agricultural businessmen, as he warned of the
risk that imbalances pose to capital flows and exchange rates.

Still, he did not signal imminent intervention, saying the
peso’s appreciation has been lower in “multilateral terms.”

President Sebastian Pinera reiterated his government was
working to increase Chilean investment abroad to offset the
impact on currency rates from incoming capital,

“We are working to open our capital accounts in a way that
allows higher limits on investment (abroad), not just for
pension funds, but for institutional investors,” Pinera said in
a speech to the same conference later on Monday.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a TAKE A LOOK on Chile's economy, peso [ID:nN30113748] For SCENARIOS on possible Chile forex moves [ID:nN20224723] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Chile’s central bank has already lifted the limits on
investment abroad for local pension funds by as much as 20
percentage points over the past two years.

Even with greater freedom to invest abroad, it isn’t clear
how much more of the $138 billion under management would be
moved out of peso-denominated assets. Few of the funds in the
privately-managed pension system are now investing in foreign
assets to the maximum extent allowable.

Pinera also said his government was working on ways to make
it easier for exporters to hedge against currencies.

Central Bank board member Enrique Marshall, in a
presentation released on Monday, reiterated that a stronger
peso remains a concern that could have implications for the
economy and inflation.

The peso closed 0.16 percent higher on Monday as the dollar
weakened across the board and prices rose for copper (HGZ0: ),
Chile’s main export. The peso has has gained around 10 percent
since the beginning of July alone, bringing its gains so far
this year to 4.75 percent amid high volatility.

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

Investors chasing high interest rates provided by
fast-growing emerging economies have swamped these countries
with dollars, boosting the value of local currencies.
(Reporting by Brad Haynes and Alonso Soto)

UPDATE 3-Chile cenbank warns of risks of global imbalances