December 5, 2022

Central Bank of Chile intervenes with a program of US$ 25,000 million

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(CNN Spanish) — The Council of the Central Bank of Chile announced this Thursday a program of exchange intervention and preventive provision of liquidity in dollars for up to US$ 25,000 million, due to the historic rise that the North American currency has suffered in recent weeks in the southern country.

The entity explained through a statement that since the beginning of June the dollar has appreciated around 7% worldwide, while the price of copper -Chile’s main export- has fallen around 30%.

“In a context of local uncertainty that remains high, the above has continued to put downward pressure on the Chilean peso. In recent days, however, the depreciation of the peso has occurred with unusually high intensity and volatility, which has put pressure on the formation of prices in the foreign exchange market. The persistence of this scenario raises the probability that significant distortions will be generated in the functioning of the financial market in general”, warned the entity.

The Central Bank explained that its program will enter into force on Monday, July 18, and will last until September 30, 2022. Its measures consider the sale of spot dollars for an amount of up to US$10,000 million and also the sale of financial instruments. exchange coverage for an amount of up to US$ 10,000 million.

Regarding the provision of liquidity in dollars, the agency pointed out that “although the money market in said currency is working properly, the Council considers it appropriate to preventively offer a currency swap program for an amount of up to US$ 5,000 million. ”.

“The monetary effects in local currency of the operations of this intervention will be duly sterilized, so that the provision of liquidity in pesos is consistent with the monetary policy rate,” the entity highlighted.



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