Search

 

Cablegate: Update On Chile's Economy: Markets Recover On October 13

VZCZCXRO5589
OO RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHMT
RUEHNG RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHSG #0919 2882013
ZNR UUUUU ZZH
O 142013Z OCT 08
FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3811
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUEHSO/AMCONSUL SAO PAULO 0785
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEKJCS/SECDEF WASHDC
RUEAIIA/CIA WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SANTIAGO 000919

STATE PLEASE PASS TO USTR KDUCKWORTH/MSULLIVAN
TREASURY FOR SSENICH
COMMERCE FOR KMANN

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN ETRD EINV ECIN PGOV PREL CI

SUBJECT: UPDATE ON CHILE'S ECONOMY: MARKETS RECOVER ON OCTOBER 13

REF: A) SANTIAGO 909 B) SANTIAGO 915

1. SUMMARY: This is the third in a series of reports on major
developments in Chile's economy in the face of recent, global
financial turmoil. On Monday, October 13, there was rebound in
copper, the exchange rate, and the Chilean stock market, following
the trend of international markets. Small- to medium-sized
enterprises are having greater difficulty accessing credit. The
Central Bank announced that only a small percentage of Chilean
banks' liabilities are held outside of Chile. END SUMMARY.

Copper Prices Bounce Back A Little
----------------------------------

2. Copper closed at $2.28/pound, less than a 1% increase on the
price of October 10. Prices may have been affected by an
announcement from BHP Billiton, owner of Chile's Escondida mine (the
largest in the world). The company declared force majeure (release
from contractual obligations) on sales contracts for nine months due
to the failure of one of its mills. Press reports estimated the
failure could reduce Escondida's production of annual refined copper
by 10%.

Chilean Peso Up vs. U.S. Dollar
-------------------------------

3. The Chilean Peso registered its largest one-day appreciation
against the U.S. Dollar in 13 years, closing at almost 618 Chilean
Pesos to 1 U.S. Dollar (a change of more than 20 Pesos, or over 3%,
on the rate of October 10).

Stock Market Rebounds
---------------------

4. The IPSA regained almost 13% of its value from its close on
October 10, in line with stock markets worldwide. The rebound was
led mostly by retail and bank shares. It was the largest one day
increase since the Index was created.

Difficulty Securing Credit For Smaller Companies
--------------------------------------------- ---

5. Press reports indicate Chilean banks are withdrawing lines of
credit to small- to medium-size enterprises. Banks are making new
loans more difficult through higher credit requirements and interest
rates. One company CEO claimed that before the financial crisis,
companies could get a loan for LIBOR + 80 basis points, now the rate
is LIBOR + 800 basis points. The Minister of Economy said October
12 there was no crisis in the private sector and that restricted
access to credit was understandable given the state of global
financial markets.

Central Bank: Chilean Banks' Foreign Debt Is Low
--------------------------------------------- ----

6. Central Bank President De Gregorio said in October 12 remarks to
the press that only 7% of Chilean banks' debt is held by foreign
entities. He underlined that one of the Central Bank's primary
roles is to minimize the effects of the global financial crisis in
Chile. De Gregorio noted that if firms began to hold back on
investment in Chile, the Central Bank would have to factor this into
monetary policy. This might be a hint that the Central Bank is
considering a less contractionary policy.
SIMONS

© Scoop Media

 
 
 
 
 
World Headlines

 

Werewolf: Gordon Campbell On North Korea, Neo-Nazism, And Milo

With a bit of luck the planet won’t be devastated by nuclear war in the next few days. US President Donald Trump will have begun to fixate on some other way to gratify his self-esteem – maybe by invading Venezuela or starting a war with Iran. More>>

Victory Declared: New Stabilisation Funding From NZ As Mosul Is Retaken

New Zealand has congratulated the Iraqi government on the successful liberation of Mosul from ISIS after a long and hard-fought campaign. More>>

Gordon Campbell: On The Current US Moves Against North Korea

If Martians visited early last week, they’d probably be scratching their heads as to why North Korea was being treated as a potential trigger for global conflict... More>>

ALSO:

Gordon Campbell: On The Lessons From Corbyn’s Campaign

Leaving partisan politics aside – and ignoring Jeremy Corbyn’s sensational election campaign for a moment – it has to be said that Britain is now really up shit creek... More>>

ALSO:

Another US Court: Fourth Circuit Rules Muslim Ban Discriminatory

ACLU: Step by step, point by point, the court laid out what has been clear from the start: The president promised to ban Muslims from the United States, and his executive orders are an attempt to do just that. More>>

ALSO: