Chile cenbank chief happy with forex intervention

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SANTIAGO, May 16 (Reuters) - Chile's central bank is happy with the progress of its $8 billion foreign exchange intervention program to curb the strong peso, bank president Jose De Gregorio said on Friday.

The program "is proceeding as we expected it to," De Gregorio told reporters after a business forum in the capital Santiago. "The system is working. We are happy with this intervention program."

The bank announced the intervention in April after the peso firmed nearly 16 percent against the dollar in 2008, and has been buying $50 million worth of dollars a day in auctions.

Since then, the peso <CLP=CL> CHILJ has pared its appreciation versus the greenback to about 7 percent year-to-date.

"This program of accumulating (dollar) reserves will allow us to better confront any additional, abrupt and severe deterioration in the foreign environment," De Gregorio said.

Economists say this type of intervention tends to worsen domestic inflationary pressures, but De Gregorio said the measure was "coherent with our inflation objectives."

Chile's 12-month inflation slowed to 8.3 percent in April, but is still well above the central bank's medium-term target rate of 3 percent. (Reporting by Antonio de la Jara, Writing by Simon Gardner; Editing by Leslie Adler)