Chile at fair value

Economy.com’s Coutino expects relative stability for the Chilean peso throughout 2005. Currently trading around 585 against the U.S. dollar, he sees the peso hovering around 580 throughout the year.

“It's fairly stable — I don't expect any strong depreciation,” he says.

The Chilean currency has made strong gains vs. the U.S. dollar since late 2003 (moving from around 720 to the current level) in part because of the rally in the copper market and its attendant economic growth.

However, analysts say the “good news” might already be priced into the currency. Ideaglobal’s Bernal believes the Chilean currency has found something of an equilibrium level and does not recommend buying it for a long-term play.

“The outlook is not that bullish anymore,” he says. “I expect the Chilean peso to linger around 580 for a very long time. This level is consistent with the level of development of the Chilean economy.”