Chile’s peso fell the most since October 2008 after the central bank said it plans to buy $12 billion in the foreign-exchange market starting tomorrow in an unprecedented bid to weaken the currency.
The peso fell 4 percent to 485.05 per U.S. dollar as of 8:41 a.m. in Santiago (6:41 a.m. New York time) from 465.75 per dollar at yesterday’s close. It gained 8.4 percent in 2010, the best-performing currency in Latin America. 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 as the Federal Reserve pumps $600 billion into the U.S. economy while keeping its benchmark interest rate near zero. Chile’s peso has gained 17 percent against the U.S. dollar since the end of June, second only to CONTINUES HERE
Gotta love the free market, weon.