Oct. 15 (Bloomberg) -- Mexico's peso fell against the dollar, posting its first weekly drop in five, as inflation gains spurred some traders to exit bets on the currency's rise.

The peso's failure to breach a so-called support level on Oct. 11 amid the fastest annual inflation in 17 months prompted some traders who built up record numbers of bets on the peso's gain to reverse their positions, according to analysts including Douglas Smith at Standard Chartered Bank.

``With these long positions its like everybody gets on the same side of the boat, and then they all want to rush out at once,'' said Andrew Chaveriat, a technical analyst at BNP Paribas SA in New York.

Mexico's currency dropped 0.6 percent to 11.4538 per dollar at 5 p.m. in New York, from 11.3870 late yesterday. The peso had its biggest weekly plunge in a year, falling 1.8 percent.

So-called peso long positions exceeded bets on a decline, or shorts, by 54,900 in the week ended Oct. 12, compared with 45,300 a week earlier, the Washington-based Commodities Futures Trading Commission said today.

Mexico's monthly inflation rate climbed to a 10-month high of 0.83 percent in September. Inflation in the 12 months through September was 5.06 percent, above the central bank's year-end target of range of 2 percent to 4 percent.

The Mexican central bank took no action to push up interest rates at its twice-monthly monetary policy meeting on Oct. 8.

Colombian Peso

Colombia's peso declined 0.1 percent at 2,563.25 per dollar after dropping 0.9 percent yesterday. The currency had its second straight weekly gain, adding 1.1 percent.

Dollar purchases by the Colombian central bank pushed the country's currency lower yesterday. The central bank bought U.S. dollars after the peso strengthened past 2,540 two days ago, according to a report by Correval SA, a Bogota-based brokerage.

The central bank is trying to stem the peso's 8.6 percent gain this year to help exporters, who may lose sales if the rising currency makes their goods too expensive for foreign buyers. Colombia's peso had the second-biggest gain this year out of 60 currencies, after the Uruguayan peso.

Chile's peso was little changed at 608.80. The peso had its biggest weekly decline in 13 weeks following a plunge in the price of copper, Chile's biggest export, two days ago.

Copper rose 3.1 percent to $1.309 a pound on the New York Mercantile Exchange today, after falling almost 13 percent in the past two days on signs of weakening demand in China, the world's biggest buyer of the metal.

Argentina's peso rose 0.1 percent to 2.9690 per dollar. It fell 0.2 percent for the week, the first decline in five.

To contact the reporter on this story: Jennifer Coogan in New York at Jcoogan4@bloomberg.net.

Last Updated: October 15, 2004 17:15 EDT