Reuters: US Dollar Report: UPDATE 1-Chile cenbank sees inflation, growth in 'trajectory of normalization'

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UPDATE 1-Chile cenbank sees inflation, growth in 'trajectory of normalization' Apr 26th 2013, 13:11 Fri Apr 26, 2013 9:11am EDT SANTIAGO, April 26 (Reuters) - The most recent economic data in Chile reaffirm projections that the export-dependent economy's growth and inflation are in a "trajectory of normalization," central bank governing board member Enrique Marshall said on Friday. Earlier this month, the central bank cut its 2013 inflation forecast and hiked its projection for growth in gross domestic product, citing the robust expansion of domestic demand as a risk to the nation's economy. GDP is seen expanding by 4.5 percent to 5.5 percent this year and inflation in 2013 is seen at 2.8 percent. "There are risks, both internal and external, that are present and should be cautiously monitored ... in that sense, the recent evolution of copper prices highlights that the good external conditions that have benefited Chile's economy lately can change," Marshall said in a presentation posted on the bank's website. Chilean manufacturing output is expected to grow at a mild pace for the second month in a row in March, as growth in the food and beverages industries is offset by fewer working days, a Reuters poll showed on Wednesday. Copper prices have rebounded from one-and-a-half-year lows at 6,762.25 a tonne as of Tuesday and was set to close the week up around 2 percent, but is still down 10 percent for the year. The lower prices for copper, Chile's top export, have pulled the Andean nation's peso currency back from the 1-1/2 year highs it hit in early April. Despite the peso's recent depreciation, Marshall said that "the real exchange rate is estimated to be ranging on the low end of values coherent with its long-term fundamentals." The real exchange rate is a measure used by the central bank, in part to gauge the competitiveness of Chilean exports. Before retreating in recent weeks in line with falling copper prices, the peso touched the same levels that had prompted the central bank to launch a dollar-purchasing program in early 2011 to stem the currency's strength. The peso typically moves in line with copper prices, as higher prices mean more dollars entering the local market due to sales of the metal. The inverse is true of lower prices. Link this Share this Digg this Email Reprints

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