By Drew Benson
Feb. 3 (Bloomberg) -- Argentina’s peso slid to the lowest in more than six years as dollar inflows from cereal exporters dried up amid the country’s worst drought in half a century.
The peso dropped 0.2 percent to 3.4963 per dollar at 9:25 a.m. New York time, from 3.4903 yesterday. The currency touched 3.497, its weakest since Dec. 17, 2002.
“There is plenty of demand for dollars, but the supply is down since this year’s grain harvest isn’t as good due to the drought,” said Gustavo Quintana, a currency trader with Lopez Leon Brokers in Buenos Aires. Quintana forecasts the peso sliding to 3.5 per dollar by the end of the month.
The yield on Argentina’s inflation-linked peso bonds due in December 2033 rose six basis points, or 0.06 percentage point, to 16.78 percent, according to Bloomberg prices.
Chilean bond yields dropped to their lowest in eight months amid forecasts the central bank will cut its key lending rate by another full percentage point next week.
The central bank will lower rates to 6.25 percent from 7.25 percent, according to the median estimate of seven economists surveyed by Bloomberg News. Policy makers unexpectedly cut the overnight rate by a full percentage point on Jan. 8 after prices fell in December at the fastest pace since 1966.
The yield for a basket of five-year peso bonds in inflation- linked currency units, known as unidades de fomento, dropped two basis points to 2.56 percent, its lowest since May 23, according to Bloomberg composite prices.
Chile’s peso climbed for the first time in four days, rising 0.4 percent to 623.75 per dollar, from 626.25 yesterday.
To contact the reporter on this story: Drew Benson in Buenos Aires at Abenson9@bloomberg.net
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