NEW YORK The Chilean peso
is benefiting from the "afterglow" of the commodity boom due to
the countrys strong mining investment cycle, according to
a Nomura Securities International Inc. executive.
The peso would usually have
weakened, given its close correlation to copper prices, which
have been falling, but this has not happened, Tony Volpon, head
of emerging markets research Americas at Nomura, told delegates
at the Society for Mining, Metallurgy and Explorations
mining finance conference in New York. "Chile has a very strong
foreign direct investment (FDI) cycle in mining that is
generating strong capital inflows and it has allowed the
currency to remain very strong even though the copper price is
But there are questions over how
long this "afterglow" can last, given the backdrop of an
environment in which copper prices are stable to falling.
"While Chile is benefiting from the strong FDI cycle currently,
over the next couple of years investments look set to fall,
which will have implications for the countrys currency
and its balance of payments," Volpon said.
He is not concerned about the
fate of Chile, the worlds biggest copper producer,
though. "Chile is still very market friendly and has room to
adjust to the changing dynamics," he said.
Volpon also is positive about
mining growth in Colombia, Mexico and Peru, but is negative on
the prospects for Argentina and Venezuela, where populist
government policies have focused on boosting consumption.
"Argentina and Venezuela will see macro-economic stresses now
that the commodity boom is tapering off," he said.
"If we think forward in this
less-healthy environment, there has to be some kind of change.
It might be forced by the market, or it could be driven by
politics," he added, pointing to Argentine elections set for