Chile Peso Ends At One-Month High

Copper prices and Chilean Peso riding in tandem :

SANTIAGO  (Dow Jones)--The Chilean peso gained ground against the dollar Wednesday, ending at a one-month high, as international copper prices rose and institutional investors sold dollars.

The peso ended at  CLP460.70  to the dollar, versus Tuesday's close of  CLP464.50 , after trading in a range of  CLP460.70 to CLP464.50 .

As  Chile  is the world's premier copper producer, accounting for a third of global supply, the peso often takes trading cues from international copper prices.

Spot copper prices on the London Metal Exchange gained 0.8% to  $4.17169  a pound, according to  Chile's  Cochilco state copper commission, as investors focus on better physical demand from  China  and concerns about supply.

Traders argue that the peso will continue strengthening if copper prices remain above  $4.00  a pound.

Also, rising international equity markets, which are a bellwether for risk sentiment, boosted the peso.

With risk appetite returning, private pension fund managers,  Chile's  largest institutional investors, sold dollars, said a local currency trader.

 Chile's  central bank, as part of its ongoing  $12 billion  currency-intervention program, purchased  $50 million  Wednesday at an average rate of  CLP463.68  to the dollar. It has accumulated  $8.55 billion  so far this year.

In the fixed-income market, yields on inflation-indexed Chilean central-bank bonds, or BCUs, ended higher following the central bank's scheduled auction of bonds.

The yield on five-year BCU bonds ended at 2.37%, from 2.36% on Tuesday, while the yield on 10-year BCUs closed at 2.40%, from 2.34% the previous session.