Chilean Peso Drops to Five-Week Low on Global Growth Concern

Chile’s peso extended its longest streak of losses this year as mounting concern that a global economic slowdown will damp exports for the top copper-producing nation pushed the currency to a five-week low.

The peso plunged 1.2 percent to 491.25 per U.S. dollar at from 485.50 yesterday, its fifth consecutive decline. The currency has weakened 2.3 percent in the last month. It continued to fall in after-hours trading, weakening as much as 493.23 as of 3:15 p.m. in Santiago, according to Datatec prices.

“It’s tied to what’s happening internationally,” said Ronald Volpi, head of spot currency trading at EuroAmerica Corredores de Bolsa SA in Santiago.

Copper slumped as much as 3.2 percent in New York, heading for the biggest retreat in two weeks, and the MSCI All-Country World Index (MXWD) lost 2.1 percent after the European Union’s statistics office confirmed that Europe’s economy contracted 0.3 percent in the fourth quarter. A report yesterday showed U.S. factory orders declined in January while China announced the lowest annual growth target since 2004.

Holders of 20 percent of the Greek bonds available for a swap have said they will participate in the debt restructuring, which ends March 8 and is required for a bailout.

Chilean bond yields dropped. The yield on 10-year inflation-linked central bank bonds fell four basis points to a two-week low of 2.38 percent.

Chilean interest-rate swaps declined, as they did in other countries such as Australia and Brazil. The one-year swap rate slid four basis points to 4.99 percent.

To contact the reporter on this story: James Attwood in Santiago at Jattwood3@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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