Peso in line with longer-term fundamentals--De Gregorio
* Bank does not rule out intervention
* Peso has retreated slightly from 7-month highs (Updates with De Gregorio presentation)
SANTIAGO, Aug 24 (Reuters) - Chile's peso is in line with longer-term fundamentals in real terms but the central bank can intervene in exceptional circumstances and does not rule out using the tools at its disposal, Central Bank President Jose De Gregorio said on Tuesday.
The peso recently surged to seven-month highs, boosted by strong prices for copper, Chile's top export, and as an interest-rate cycle in tightening mode lures investment. That prompted verbal warnings from President Sebastian Pinera and Finance Minister Felipe Larrain.
However the peso has eased back in recent sessions and was trading weaker on Tuesday, and was little moved after De Gregorio spoke.
The floating exchange rate allows for foreign exchange intervention in exceptional cases, as we have done on previous occasions, De Gregorio said in a presentation uploaded to the bank's Web site.
The central bank will not renounce the use of its instruments, but their use will depend on the board's evaluation that their benefits and effectiveness outweigh their cost.
Larrain on Thursday warned investors that authorities could intervene to stem a sharp appreciation of the local peso. For more, see [ID:nN19246318]. (Reporting by Ignacio Badal; Writing by Simon Gardner, Editing by Chizu Nomiyama)