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Chile Peso Is Sinking Fast, But Central Bank Unlikely to Step In

  • Drop tied to external factors, so policy makers more tolerant
  • Few countries are as dependent on Chinese demand as Chile

The last time Chile’s peso fell like this, in the midst of the biggest political demonstrations in decades, the central bank intervened to stop the panic. This time it’s likely to sit things out because the drop is tied to a global phenomenon: the grim outlook for Chinese growth as the coronavirus spreads.

Few countries are as dependent on Chinese demand as Chile, which exports the bulk of its copper production to the country, and the peso has had its worst start to the year this century amid concern the virus could turn into a devastating global epidemic. It weakened 6.1% and is testing the 800 per dollar mark for the second time in less than three months.