By Fabian Cambero
SANTIAGO (Reuters) – Chile’s central bank said on Wednesday it was speaking to its U.S. and Chinese counterparts to increase flexibility in foreign exchange operations as the coronavirus pandemic ravages the nation’s once-stable economy.
The bank said it had asked the New York Federal Reserve to register for overnight repo operations to facilitate credit swaps, announced in March to help foreign central banks during the crisis to exchange their holdings of U.S. Treasury securities for overnight dollar loans.
In a statement, the bank added it was also speaking to China’s central bank to expand an existing currency swap agreement worth 22 billion yuan ($3 billion).
“This expansion, which is expected to materialize in the coming weeks, aims to strengthen Chile’s financial position and facilitate Chilean foreign trade operations with China,” the bank said.
Separately, the central bank said it would gradually scale back its foreign exchange intervention program in the non-deliverable forward (NDF) market as volatility of the country’s peso currency has subsided. Policymakers had already suspended similar operations in the spot market as the peso has stabilized.
The bank launched both programs late in 2019 after protests rocked Chile and sent the peso spiraling to historic lows.
The central bank said it would remain vigilant amid the coronavirus outbreak and intervene again in case of “excess volatility.”
Chilean central bank speaking with U.S., Chinese counterparts to broaden forex lines
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