November 28, 2019 / 11:49 PM / 12 days ago

Chile central bank says to sell up to $20 billion in interventions

FILE PHOTO: The emblem of the Chile's Central Bank is seen at its headquarters in Santiago, Chile March 29, 2018. REUTERS/Ivan Alvarado

SANTIAGO (Reuters) - Chile’s central bank will sell up to $20 billion in foreign currency interventions starting on Monday in a bid to stabilize the local currency, the monetary authority said in a statement on Thursday after the peso hit a new all-time low.

The intervention program is to last through May 29, 2020, the statement said. Chile’s peso plummeted to a new low for the second day in a row at market close on Thursday following more than a month of protests over inequality that turned increasingly violent again this week.

“The events that have occurred in our country in recent weeks have affected the normal functioning of the economy,” the bank’s statement said.

The program will consist of a possible $10 billion in dollar sales on the spot foreign exchange market and up to another $10 billion in sales of “exchange hedging instruments”.

“This exceptional measure is consistent with our monetary policy, based on inflation targeting and exchange rate flexibility,” the statement said.

It said it would “continue to use all the tools available” to maintain the normal functioning of internal and external payments, and achieve its 3% annual inflation target.

At least 26 people have been killed, more than 13,000 have been injured and 25,000 detained amid demonstrations, looting and arson attacks on supermarkets, metro stations, hotels and churches. Tuesday night saw almost 100 arson and looting attacks and clashes with police around the country.

The bank was expected to slash its benchmark interest rate to 1.5% in December, according to a monthly poll of analysts published on Nov. 12, as ongoing unrest and sputtering growth plague the copper-producing South American nation.

Analysts said they expected consumer prices to remain unchanged in November, but rise slightly by 0.1% in December, with annual inflation expected at 2.7% percent, just below the bank’s target.

Reporting by Fabian Cambero; writing by Hugh Bronstein; Editing by Sandra Maler

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