Latin American Currencies: Chile Peso at Lowest Since July 2005

By Drew Benson

Oct. 2 (Bloomberg) -- Chile's peso tumbled to its lowest since July 2005, amid a rout of most Latin American currencies on concern that a $700 billion U.S. financial industry rescue plan won't avert a global slowdown.

``The package announced here in the U.S. doesn't have as much to do with Latin America these days,'' said Aryam Vazquez, an emerging markets economist with Wells Fargo & Co. in New York. Investors in Latin America ``are more focused on the pace of U.S. growth in general.''

The U.S. Senate passed a financial industry relief measure last night. It faces a vote in the House of Representatives tomorrow.

A U.S. and global slowdown will mean less demand for commodities on which Latin American economies rely.

The Chilean peso dropped 2 percent to 570.67 per dollar, at 10:53 a.m. New York time, from 559.45 yesterday. It fell as much as 2.7 percent to 574.55, the lowest since July 29, 2005.

Financial systems in Latin America are unlikely to stop functioning normally because they became more insulated from external shocks in the past few years, Vazquez said. ``If this crisis had occurred 10 years ago, Latin American financial systems would be in the Dumpster by now.''

Colombia's peso dropped 1.6 percent to 2,188. 5 per dollar from 2,155 yesterday, according to the Colombian foreign- exchange electronic transactions system, known as SET-FX.

The yield on Colombia's benchmark 11 percent bonds due in July 2020 fell 15 basis points, or 0.15 percentage point, to 11.75 percent, according to Colombia's stock exchange. The bond's price rose 0.918 centavo to 95.266 centavos per peso.

Peru's sol ended a two-day rebound, sliding 0.8 percent to 2.9927 per dollar, from 2.9701 yesterday.

To contact the reporters on this story: Drew Benson in Buenos Aires at abenson9@bloomberg.net