Chile Seeks Weaker Peso amid Trade Deficits- Finance Minister

Chile has been able to reduce government spending to a growth rate that is less than the economy, and it is promoting ways to hedge against currency risk along with government loans to small- and mid-sized businesses, to spur exports, he said.

In 2011, the central bank spent $12 billion in foreign reserves to buy dollars in a bid to slow the Chilean peso's appreciation, Larrain said in a speech at the Americas Society.

"This is what we are doing and I would also say that, although many times you are forced to do things that in some cases you do not like, we do not believe in capital controls. We will refrain from having capital controls," he said.

Chile has seen its peso currency appreciate as the country faces an increased amount of money in circulation from the United States, the euro zone and Japan as the central banks in those countries lower interest rates to spur economic growth.

Chile's overnight rate is 5 percent, compared to a U.S. overnight rate that is less than 0.25 percent, a gap that attracts capital to the South American nation.

The currency appreciation is also a sign of an economy that is growing more than 5 percent this year, which has helped spur a consumption boom....

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