US Dollar plunges, now trading at below 430 CLP

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SANTIAGO.-  On Wednesday the dollar opened at its lowest value against the Chilean peso in more than ten years. Traders have said that the drop is due to predictions that the margin between local interest rates and United States interest rates will increase over the next few days. 

At 9:02 AM this morning, the spot exchange rate was reporting prices of $429.60 (buy) and $429.90 (sell) — indicating a 1.02% dip in the U.S. currency, compared to Tuesday’s prices of $434.90 (buy) and $434.30 (sell).

Taking the current values into account, the Chilean peso has an accumulated gain of 15.87% over the U.S. dollar so far for 2008, whereas it was only able to gain 6.44% over the U.S. dollar during the whole of 2007.

On Thursday, the Chilean Central Bank will hold its monthly meeting regarding monetary policy.  Meanwhile, the United States Federal Reserve will meet on March 18th to evaluate interest rates.

Currently, the benchmark interest rate for the Chilean economy is fixed at the nominal annual rate of 6.25% -- far higher than that of the United States, which is currently at a mere 3.0% amidst speculations of a new reduction.