WRAPUP 3-Chile peso weighs on inflation, trade balance

* Stronger peso reduces inflationary pressures

* Trade surplus falls to 22-month low on booming imports
(Updates with finance minister comment)

By Antonio de la Jara and Brad Haynes

SANTIAGO, Nov 8 (BestGrowthStock) – Chile’s sharply appreciating
peso slowed inflation and shrank the country’s trade surplus in
October to its narrowest level in nearly two years, government
data showed on Monday.

Consumer prices (CLCPI=ECI: ) rose 0.1 percent in October,
below market forecasts after a 0.4 percent rise in September.

“We’re in a virtuous cycle with high growth, high job
creation and contained inflation,” Finance Minister Felipe
Larrain told reporters in Santiago, saying inflation was on
track to hit the central bank’s target for 2010.

Chile’s trade surplus (CLTBAL=ECI: ) fell 88 percent to
$214.9 million in October from $1.785 billion the month before,
and was down from a $925.4 million surplus in October 2009.

The 14 percent appreciation of the peso (CLP=CL: ) since June
has made imports more affordable, reducing inflationary
pressure and bringing Chile’s trade balance to a 22-month low.

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“We’re seeing a strong effect of the exchange rate,” said
Matias Madrid, chief economist with Banco Penta in Santiago.
“Given imports … (the trade balance) should be negative. The
only curb is the rising price of copper.”

Revenues from the country’s top export, copper, rose 47
percent in September from a year prior as copper prices climbed
to their highest levels since July 2008.

Exports totaled about $5.281 billion during October, down
from $6.502 billion in September, while imports rose to $5.066
billion, a two-year high.

Core CPI (CLCPIX=ECI: ), which strips out prices for fuel,
fresh fruit and vegetables, fell 0.1 percent in October after
rising 0.4 percent in September.

Chile’s peso was unswayed by the data, traders said,
weakening around 0.6 percent to 480.30/480.80 to the dollar in
Monday trade as it retreated from near 2-1/2 year highs on
global dollar strength (.DXY: ).
(Reporting by Santiago Newsroom; Writing by Brad Haynes;
Editing by Andrea Ricci)

WRAPUP 3-Chile peso weighs on inflation, trade balance