Chile Central Bank Won't Rule Out Increasing Foreign Exchange Reserves

SANTIAGO (Dow Jones)--The president of the Central Bank of Chile reiterated Tuesday he can't rule out increasing the bank's foreign currency reserves, but noted that current levels are "adequate."
With the peso trading at 31-month highs against the dollar, which exporters claim cuts into their competitiveness abroad, currency market participants say the bank could intervene if the peso continues to firm.
"We don't rule out anything ... but we are fairly satisfied with current reserve levels," bank president Jose De Gregorio told business leaders gathered at a conference where he commented on the bank's Monetary Policy Report released earlier this week.
As of Dec. 7, the central bank had $25.64 billion in foreign currency reserves.
The last time the central bank intervened in the local market was in 2008 when it announced programmed daily dollar purchases that lasted for several months.
Before it began its 2008 intervention, the peso was trading at 10-year highs against the dollar.
The central bank also reiterated that in real terms, the peso is trading at the lower end of the central bank's tolerance levels.
"We are at the minimum levels that are coherent with fundamentals," he said, reiterating similar comments made earlier in the month.
The monetary authority bases its decisions on the peso's real exchange rate, which is the nominal rate corrected for prices.