Chile’s peso weakened for a fifth straight day in the longest stretch of losses this month as concern turmoil in Cyprus may deepen Europe’s financial crisis led to strength in the U.S. currency as a refuge.
The peso declined 0.1 percent to 472.45 per U.S. dollar at 12:02 p.m. in Santiago. The currency has weakened from a one- month high of 470.89 reached March 12 while staying in a range of 470 to 475 per dollar this month.
“The dollar’s rising very slightly,” said Ronald Volpi, the head of spot currency trading at EuroAmerica Corredores de Bolsa SA. “We’re still stuck in this range.”
A plan to cut the cost of a rescue package for Cyprus’s economy by raiding bank accounts sparked outrage, leading to speculation the country’s lawmakers may strike the measure down. The fight over the bailout risks triggering more turmoil in the euro area financial crisis that started in 2009.
Volatility in the peso extended its decline. Ninety-day volatility, a gauge of the magnitude of the currency’s average daily fluctuations over the past three months, dropped to the lowest since 2006. The peso has bounced between 469 and 476 per dollar since Jan. 3.
“I have never seen a market in the same range for so long,” said Alejandro Araya of Banco Santander Chile in Santiago, who has traded the currency for 20 years. “It can’t continue.”
The peso reached the strongest level in two decades against a group of 20 major trading partners in February, according to central bank data.
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