Chile's peso currency strengthened 1.23 percent on Thursday to close at 609.50/610.00 per U.S. dollar, catching energy from gains in the Brazilian real a day after Brazil's central bank raised its benchmark interest rate.

Traders said the peso was also rebounding on profit taking after it fell 1.05 percent on Wednesday when it also was following Brazil's real, which weakened ahead of the rate decision.

"What happens is the dollar's rise (against the Chilean peso) in recent days was an overreaction to a regional issue, mostly the fall of the real in Brazil, which sucked in dollars," said Carlos Serrano, analyst with Finanzas Today consulting house.

The real reversed direction on Thursday and strengthened 0.77 percent to 2.850 per dollar as currency traders expected higher interest rates to draw more foreign capital into the country.

(From Reuters, October 21, 2004)

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