The Central Bank of Chile announced this Thursday night the foreign exchange market intervention for 25,000 million dollars, in an attempt to stop the record depreciation of the peso.
In a statement, the entity announced a “foreign exchange intervention program and preventive provision of liquidity in dollars”, given the depreciation of the peso that in recent days has “occurred with an unusually high intensity and volatility, which has stressed the formation exchange market prices.
“The persistence of this scenario increases the probability that significant distortions will be generated in the functioning of the financial market in general,” added the BC.
The Chilean peso has consecutively broken downward records, trading at 1,051 units per dollar this Thursday, accumulating a fall of 8.6% in the last week.
According to the Central Bank, the peso has been pressured by the global appreciation of the dollar -in line with most emerging market currencies- and the fall in the international price of copper, of which Chile is the world’s leading producer. , with about a quarter of the global supply.
The depreciation of the local currency also occurs “in a context of local uncertainty that remains high”, due to the uncertain result of the plebiscite on September 4 in which Chileans must approve or reject a new Constitution, which replaces the inherited one. of the dictatorship of Augusto Pinochet (1973-1990).
The Central Bank explained that the intervention program contemplates a preventive provision of liquidity for an amount of up to 25,000 million dollars from next Monday, July 18, and until September 30, 2022.
At the end of each week, the amount and other terms and conditions of the auctions of the following week will be informed.
On Wednesday, the issuing institute raised the leading rate of the economy by 75 basis points to take it to 9.75%, in the midst of a high inflation scenario, with an annual accumulated rate of 12.5% as of June, far from the target range. annual rate of 3% established by the BC.