Pesos and Protests

[helibel]

Thursday we exchanged several hundred dollars at the bank in Futrono for 817 pesos to the dollar. XE was showing 829 so 12 pesos different.

[41southchile]

Yeah XE magically dropped their rate down to 804 around 11pm to midnight last night.
This has been interesting to watch to say the least.

[Britkid]

Morningstar (from google search) is showing the peso 8% (!) weaker than on xe.com (compared to both dollars and pounds). Oanda is nearer to Mornigstar. Bloomberg and Transferwise are closer to the xe.com rate. Spread is 799-867 (!).

xe.com previously was the one that showed the weakest peso rates, now it's the other way around. Screwy times.

[El Presidente]

The Central Bank is starting its intervention operations today, according to the following Schedule:

The press release can be found in the following link:
https://www.bcentral.cl/documents/20143 ... 5053871961

The peso opened around 798 and is starting to depreciate again. I generally tend to use the Bolsa Electronica de Chile (BEC) because it shows real-time interbank operations:
https://www.bolchile.com/dolar-public#dolar-public

[admin]

so the peso basically went nowhere today. I guess that is some sort of progress.

[El Presidente]

An interesting short memo from the Central Bank today which tries to explain its current intervention policies:
https://www.bcentral.cl/documents/20143 ... 5387991897

It stresses that the intervention is not to maintain a certain exchange rate but rather reduce volatility:

El Banco Central no persigue un precio específico, sino reducir los elevados niveles de volatilidad que se estiman excesivos, más aún cuando estos movimientos son rápidos y sucesivos en la misma dirección

There´s also an interesting point at the end on why the Bank will not be using its international reserves to pay for social spending:

si se usaran las reservas para financiar gasto fiscal, sería equivalente a financiar el déficit fiscal imprimiendo billetes, lo que en la experiencia chilena y mundial, genera alta inflación....las reservas sirven para evitar inestabilidad económica. Los países que mantienen bajos niveles de reservas o que las usan para fines fiscales, han terminado en hiperinflaciones o en severos programas de ajuste con el Fondo Monetario Internacional

[admin]

1 USD = 779.909 CLP

[admin]

took a while, but central bank seems to be wrangling the peso down.

Probably the general return of some sort of stability has more to do with it.

[PXYC]

Today on XE 773 clp

[thisisreallycomplicated]

I noticed that www.bcentral.cl has been showing the next day's rate in advance, like this:

Dólar Observado 784,25
Dólar Observado 09-12-2019 779,04

I don't remember if they did that before shtf. But it does seem to encourage some dollar selling for people who convert to CLP with ATM's, when the next day's rate is worse. Especially when the official rate is a little higher than what's currently showing on some other web sites, like it is now. Anyway, it seems like a pretty good idea, if that's what they're doing.

[El Presidente]

Yep, that's how they publish it as per legal requirement.

The current published observed dollar is based on the previous banking day's trades in the interbank market. They usually publish between 5-6pm in the arvo with the next business days date. If you checked their website at 6pm on 17 September this year, you would have seen an exchange rate for 23 September (due to the 3 public holidays in between).

Link to methodology here.

El dólar observado corresponde a un promedio ponderado por montos transados de las operaciones spot (contado) de compra y venta entre el peso chileno y el dólar de los Estados Unidos de América, efectuadas en el Mercado Cambiario Formal durante el día hábil bancario inmediatamente anterior.

[thisisreallycomplicated]

Yep, that's how they publish it as per legal requirement.

Thanks, so it's nothing new. Of course it could have the opposite effect in the other direction:)