Latin American Currencies Hit Record Lows as Drop Turns to Rout

(Bloomberg) -- Latin American currencies turned a decline into a rout this week, with three of the region’s most-traded bills hitting record lows.

The Colombian and Chilean pesos both fell to all-time lows Wednesday as a wave of anti-government demonstrations threaten to damp economic growth. Brazil, which has avoided such the political turbulence, also saw its currency headed for a record low, forcing the central bank to intervene for the third time in two days.

Chile’s currency is down 11% in the past month after the worst social unrest since the restoration of democracy in 1990 saw shops looted and public buildings burnt. Now Colombia is following suit, with protests convulsing the nation for the past week. On Wednesday, demonstrators blocked bus lanes in Bogota and some schools canceled classes, even after Duque pledged tax breaks for the poor.

“There’s a reason this has been dubbed the Latin American equivalent to the Arab Spring,” said Omotunde Lawal, a London-based money manager at Barings. “Currencies are adjusting for idiosyncratic events in each country.”

While it’s not on the radar of as many investors, Uruguay’s peso fell for a sixth day and trades at its weakest level ever against the dollar. The currency tends to closely track the Argentine peso, which is close to its own record low.

Latin America is now home to the three worst-performing emerging-market currencies this year: Argentina’s peso, down 37%, Chile’s peso, 15% lower, and Brazil’s real, down 9.0%. Only the Mexican peso, up 0.5%, has managed to eke out a gain against the dollar during that span.

To contact the reporter on this story: Ben Bartenstein in New York at bbartenstei3@bloomberg.net

To contact the editors responsible for this story: Carolina Wilson at cwilson166@bloomberg.net, Philip Sanders

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