Chilean Peso Leads Losses as Central Bank Boosts Reserves
Bloomberg
1/13/2021
Justin Villamil
(Bloomberg) -- Chile’s peso tumbled the most in the world on Wednesday, starting the year in volatile fashion as many had forecast -- though not for any of the reasons people expected.
The currency dropped 2.1% to 741.66 against the dollar, bringing its decline this year to 4%. That makes it the worst performing of 24 emerging-market currencies tracked by Bloomberg.
The reason is simple. Chile’s central bank announced today that it plans to boost its foreign reserves, buying $40 million a day for more than a year until its holdings reach 18% of gross domestic product. That should ultimately provide some stability in a year that will see two elections and the drafting of a new constitution following the worst social unrest in more than a generation.