MercoPress. South Atlantic News Agency

Chile: Dollar at lowest level in five month

The dollar fell to its lowest level against the Chilean peso in five months Tuesday, closing at 526.2 pesos per dollar.

This marks the dollar's lowest level since May 29, when the dollar traded at 526 pesos.

The weakening of the dollar coincides with lowered economic expectations resulting from inflation fears and a slowdown in economic growth in the United States. The U.S. Federal Reserve's recent policy of raising interest rates has added uncertainty to the foreign currency exchange market.

For its part, Chile has recently experienced exceptionally low inflation. The rate fell to a 15-month low of 2.8 from 3.8 percent in August (ST, Oct. 6).

Christian Gardeweg, of Celfin Capital, said it is likely the low inflation and low valued dollar will continue. "If the external market environment stays the same, 520 pesos could be the new benchmark in the short term and a new range will exist at 530 pesos," he said.

The slowdown in inflation has also made Chilean stocks and bonds more attractive to investors. On Wednesday the IPSA index of the 40 most-traded stocks on the Santiago exchange hit 2,362. This marked a 12-month increase of 20.2 percent. Wednesday's star stocks were SQM, Colo Colo, and Schwager.

In addition to the Chilean currency, Mexican, Columbian, and Argentine pesos all experienced significant gains against the greenback this week.

By Nate Doyle The Santiago Times