Chile Peso Drops with Plans for Dollar Buy

January 4th, 2011
in News, Banking

BloombergChile’s peso fell the most in two decades and bond yields rose after the central bank said it will buy $12 billion in the foreign-exchange market, joining other Latin American nations in a bid to offset the dollar’s decline.

Follow up:

The peso declined 4.6 percent to 488 per U.S. dollar from 465.75, the steepest drop since June 1989 when Augusto Pinochet’s military dictatorship was coming to an end. Central bank President Jose De Gregorio unveiled a plan yesterday to buy $50 million a day from Jan. 5 until Feb. 9.

Chile joins other emerging nations in a battle that even De Gregorio has signaled risks being more expensive than it is helpful.  But emerging nations are trying to offset the effects on their currency of U.S. quantitative easing.

Before today Chile’s peso had gained 17 percent against the U.S. dollar since the end of June, second only to the Australian dollar among global currencies, as surging copper prices boost trade prospects of the world’s biggest producer.  Read more at Bloomberg.....









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