Chile cuts interest rate to record low; Peso falls

Chile’s central bank lowered interest rates to record lows today. This
is the country’s latest effort to stimulate a slowing economy which is
heavily dependent on global prices and demand for its commodity
exports.

Not good news for a country like Chile. Copper demand (its primary
commodity export) looks set to slow in the upcoming months as demand
from China wanes, which until recently had been stockpiling resources.
This seems to be over and now one of Chile’s primary buyers is
sitting on mountains of unused copper. Once again, not good for
Chile, Peru or any other countries that sell their metals to China.

Bloomberg reports:

The currency slipped 1.1 percent to 552.65 per U.S. dollar at 9:15
a.m. New York time, from 546.85 yesterday.

The central bank said in May and June that traders were overestimating
the future path of interest rates. Now it will offer banks six-month
loans that match the new overnight rate of 0.5 percent and cut sales
of its own debt to push yields lower.

“It is necessary to increase monetary stimulus,” the bank said in
yesterday’s statement. “The policy rate will be held at this minimum
level for a prolonged period of time.”

To access the entire article from Bloomberg please visit:
http://www.bloomberg.com/apps/news?pid=20601086&sid=alxLFHEdnThQ

—
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Benito
International Trade Consultant
Mir Global Marketing LLC
http://www.mirglobalmarketing.com
http://www.chinasouthamerica.com

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Newswire: China South America

[Peru – China] — Peru, China relations “at best moment”

Chinese ambassador to Peru, Gao Zhengyue, said that relations between his country and Peru “are at their best moment” in history.

According to him, both countries have deepened the confidence in the political, economic, technological educational, cultural, tourism and justice areas, among others.

The Chinese diplomat noted the increase of the economic, trade flow and bilateral investments, and highlighted the increase of the Chinese investments in Peru, with over seven billion dollars.

“I am convinced that with joint efforts the relations between our two brotherly countries will enter a new stage of development and reach a higher level in the two peoples’ benefit,” said Zhengyue.

[Latin America – China – Africa] — China’s new frontier

Chinese telecom-gear makers Huawei and ZTE have already conquered Africa and Asia. Next stop: Latin America.

(Fortune Magazine) — At phone operator Movistar’s sales offices in Buenos Aires, customers line up to buy high-speed wireless services to access the web on their mobile phones. Most Argentines don’t realize, though, that the company providing the gear for their broadband connections isn’t a longtime supplier to Latin America like Alcatel-Lucent, Ericsson, or Motorola, but a relative newcomer called Huawei.

China’s telecom suppliers are coming to the Americas. Pursuing the same formula they’ve used to win business throughout Asia and parts of Africa (selling cheap gear in low-income countries), equipment makers Zhong Xing Telecommunication Equipment (also known as ZTE) and Huawei are now getting a foothold in countries such as Argentina, Chile, and Colombia. Says Leandro Musciano, project director at Movistar Argentina, a unit of Spain’s Telefónica: “Price is important.”

[Caribbean – China] — China’s expanding relations with Latin America and the Caribbean

Commentary
By Odeen Ishmael

The recent visit of Brazil’s President Luiz Inacio “Lula” da Silva to China in May 2009 reflected the Asian nation’s expanding economic and political influence in Latin America and the Caribbean (LAC). One year ago, the Brazilian government had announced that China would surpass the United States as its major business partner. The results of da Silva’s visit verified this after the two nations signed 13 agreements, including a $10 billion loan from the China Development Bank to Brazil’s state oil company Petrobras. Petrobras also concluded a deal with a subsidiary of China’s oil refiner Sinopec for the export of crude oil. A major commercial agreement will also see the beginning of huge poultry exports to China.

Brazil’s two-way trade with China, one of the few economies still growing despite the global crisis, reached US$3.2 billion in April, surpassing the $2.8 billion trade total with the US. So far this year, Brazilian exports to China grew 65 percent over the same period in 2008, rising from $3.4 billion to $5.6 billion.

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