Chile’s peso fell the most in two decades and bond yields rose after the central bank said it will buy $12 billion in the foreign-exchange market, joining other Latin American nations in a bid to offset the dollar’s decline.
The Chilean peso strengthened the most among Latin American currencies tracked by Bloomberg this week, reaching a 31-month high as copper rose and the central bank lifted its benchmark rate for the seventh straight month.
Chile’s central bank will slow its monthly interest rate increases to 25 basis points today and probably won’t announce the extra borrowing that could accompany an intervention in the currency markets, according to traders in the interest-rate swap and bond markets.
Chile’s economy will probably expand the most in five years as it recovers from last year’s recession and February’s earthquake, the central bank said, raising its forecasts for growth and inflation this year.
Chile plans its first global bond sale in pesos as part of an effort to raise $1.5 billion through 10-year international notes and help finance repairs after the February earthquake, Finance Minister Felipe Larrain said.