Chile's central bank announced a US$ 4 billion injection to stop a currency slide that saw the peso reach historic lows on successive days this week. The peso fell to 820 to the dollar at the close Thursday, breaking the 800 Pesos milestone.
The bank said it had taken the measure to mitigate eventual tensions in the financial markets. It also expressed fear that the combination of social unrest and a lack of cash flow at the end of the year would see the currency fall even further.
The foreign currency injection will be done in the form of 30- and 90-day tenders for futures between November 14 and January 9.
The Chilean peso's previous record low was 761 to the dollar in October 2002. The Peso has been hit hard by nearly four weeks of protests against the economic policies of right-wing President Sebastian Piñera.
Pinera has announced a raft of measures to pacify demonstrators angry at social and economic inequality, but many are demanding the president stand down.
The fall in the currency has raised fears that inflation will increase and GDP growth will slow. Chile’s finance minister predicted on Thursday that as many as 300,000 jobs could be lost because of the impact of four weeks of rioting on one of Latin America’s strongest economies.
Newly appointed Finance Minister Ignacio Briones told a legislative committee it was “highly likely” unemployment would jump 3% in the coming months, Diario Financiero reported. The peso currency, which hit a historic low on Thursday, also raised the specter of a hike in fuel costs, Briones told reporters outside the committee.
“Fuel prices are going to rise, it can’t be any other way,” he said.