MercoPress. South Atlantic News Agency

New record for the US dollar in Chile

New record for the US dollar in Chile

The US dollar reached a record 720 pesos this week in Chile, reflecting uncertainty about the evolution of the local economy given international events, particularly United States involvement in Afghanistan and the coming Argentine elections.

Foreign exchange transactions in Santiago last Tuesday reached 381 million US dollars when Chilean companies and banks turned into the US dollar to cover future commitments and amidst growing fears about the US and Argentine situations.

Since the beginning of 2001, the Chilean peso has lost 25% of its value against the dollar, well ahead of the local retail prices index and the government forecast.

Last August and early September the Chilean Central Bank was forced to sell 322 million US dollars of the 2 billion lump it has set aside to confront any run on the US currency.

"We're waiting to see how world markets evolve following the Afghanistan bombings" said a Santiago stock exchange broker.

Another factor influencing the Chilean market is the Argentine situation particularly last Tuesday when S&P downgraded Argentine bonds from B- to CCC, and the risk factor jumped to 1900 points.

"Argentina's is getting closer and closer to a default", said another Santiago broker.