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Chile Peso Volatility Falls to 14-Year Low as Central Bank Meets

The volatility of Chile’s peso dropped to a 14-year low amid speculation the central bank might intervene to limit appreciation.

The currency was little changed at 471.03 per dollar as of 11:42 a.m. in Santiago. Thirty-day volatility, a gauge of the magnitude of the currency’s average daily fluctuations over the past 30 days, dropped to the lowest since June 1998.

The peso has traded in a narrowing range for more than two months amid concern the central bank might step in as a growing economy and stable interest rates pressure the currency to strengthen. The peso has traded between 470 and 473 per dollar since March 4.

“The range keeps tightening.” said Eugenio Cortes, head of currency forwards at EuroAmerica Corredores de Bolsa SA in Santiago. “You have intervention on one side and the growing economy on the other.”

The Chilean central bank is scheduled to meet today. The bank probably will leave its benchmark rate unchanged at 5 percent for a 14th straight month, according to all 20 economists in a Bloomberg survey.

To contact the reporter on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net

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

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