By Fabian Cambero
SANTIAGO (Reuters) – Chile’s central bank said Wednesday it was talking to its U.S. and Chinese counterparts to increase currency exchange flexibility as the coronavirus pandemic ravages the country’s once-stable economy.
The bank said it had asked the New York Federal Reserve to register for repo operations overnight to ease credit swaps announced in March to help foreign central banks during the crisis exchange their holdings of the U.S. Public securities for overnight lending.
In a statement, the bank added that it also talked to China’s central bank about extending an existing currency swap deal worth $ 22 billion ($ 3 billion).
“This expansion, which is expected to be realized in the coming weeks, aims to strengthen Chile’s economic position and facilitate Chilean foreign trade with China,” the bank said.
Separately, the central bank said it would gradually scale down its foreign exchange intervention program in the non-deliverable futures market (NDF) as volatility in the country’s peso currency has subsided. Politicians had already suspended similar operations in the spot market as the peso has stabilized.
The bank launched both programs in late 2019 after protests shook Chile and sent the pesos spiral to historic low tide.
The central bank said it would remain vigilant amid the coronavirus outbreak and intervene again in the event of “excess volatility.”
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