Chile's Monetary Policy Group, GPM, recommended on Tuesday that the Central Bank raises 100 points the Monetary Policy Rate, taking it from the current 1,5% to 2,5%, because of an upsurge of inflation and to safeguard the macroeconomic stability of the country.
Chilean lawmakers agreed late on Wednesday to fast-track reforms to beef up security, warning that a resurgence in violence and vandalism was threatening to derail the country’s 30-year-old democracy.
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.
Chile’s finance minister warned on Tuesday of the “grave consequences” for the nation’s economy of three weeks of often violent unrest after the peso slid 4% to hit a historic low against the dollar. Ignacio Briones said the weakening of the peso was a “sign of worry” that he and his colleagues were watching very carefully.
Argentina’s peso currency fell 1.42% to a record low close of 30.92 per dollar on Friday, weighed down by an economy slipping into recession, high inflation and uncertainty driven by corruption investigations.
The US dollar climbed to 584 Chilean Pesos at the end of trading in the Santiago money market, signaling a slow but steady increase for several months now and with prospects of continuing according to analysts. A greenback at 600 Pesos is not far away according to market analysts.
Chilean authorities are feeling calmer with the exchange rate nearing 480 pesos per US dollar, Finance Minister Felipe Larrain said on Tuesday, as the currency retreated from the year-and-a-half highs it reached earlier this month.
Economic activity in Chile grew 4.7% in December from the year earlier on gains in the service and retail industries, and ended the twelve months of 2012 with an expansion of 5.5% over the previous year according to Central bank data.
Chilean inflation accelerated in February fuelled by transport and food costs, reinforcing expectations the central bank will hold its key interest rate steady next week.
Chile’s peso posted its biggest monthly drop since Lehman Brothers Holdings Inc. collapsed as a slump in copper dimmed trade prospects for the metal’s biggest producer. The peso sank 1.3% to 519.75 per US dollar on Friday.