Special regulations regarding foreign exchange operations

The Chilean Central Bank Law, which is interpreted by rulings issued by the Chilean Central Bank, regulates foreign exchange operations.

Chilean law considers the following to be foreign exchange operations:

•               The purchase and sale or exchange of any type of foreign currency.

•               Any operation that involves notes or currencies of foreign countries and the exchange notes, checks, letters of credit, payment orders, promissory notes, drawings, wire transfers by mail or cable, or any other document type denominated in a foreign currency, even if it does not involve the transfer of funds from or to Chile.

•               All acts, agreements, contracts or any other operation in which one or more of the parties assumes a liability in foreign currency.

•               All transactions involving securities, bonds, shares, or commercial paper denominated in a foreign currency.

•               Transfers or transactions in gold or gold certificates.


Contracts or documents that contain liabilities expressed in a foreign currency with the stipulation that they are payable only in Chilean pesos, are not considered as foreign exchange operations.


Limitations to foreign exchange operations

The Organic Constitutional Law governing the Chilean Central Bank that is in force since April of 1990 established the principle of free trading in foreign currency.

However, the law empowers the Chilean Central Bank of Chile to establish certain limits to foreign exchange operations.

Following are the limits that the Chilean Central Bank currently applies to foreign exchange operations:

1.  Some operations must be informed to the Chilean Central Bank and performed through the FEM. These are, among others: foreign exchange operations undertaken by insurance companies and reinsurance operations; derivative operations; investment operations, deposits and credits abroad; and credits, deposits, investments and capital contributions coming from abroad.

2. Other operations of which the Chilean Central Bank must only be informed are payments related to imports and exports.

3.  Operations that must be performed through the FEM but need not be informed are, amongst other: royalty payments for trademarks, copyrights and patents and operations with foreign capital funds.

Furthermore, the law empowers the Chilean Central Bank to establish certain restrictions to foreign exchange operations that consist of: need to bring back export proceeds and foreign currency liquidation; reserve deposits on credits, deposits or investments in foreign currencies that are coming from or granted abroad; requirement of prior authorization for some payment obligations or for the remittance of foreign currencies abroad; and limitation to the foreign currency held by the FEM entities. The Chilean Central Bank has not issued restrictions that are currently in force.


Differential exchange rates

The foreign exchange regulations allow freedom in the setting of exchange rates for transactions on both the formal and the informal exchange markets. The principal foreign currency quoted in Chile is the US dollar and exchange rates for other currencies are usually linked to the dollar exchange rate.

The following exchange rates in relation to the US dollar have evolved:

•               The formal rate which is quoted by banks and financial institutions. An average of the previous day’s transactions ("dólar observado") is published daily by the Central Bank and is the "official" rate for payment of taxes and customs duties.

•               The informal rate ("dólar informal") is quoted on the Santiago Stock Exchange.

•               The agreed rate ("dólar acuerdo") is fixed daily by the Central Bank for a limited number of its own transactions. For certain transactions with banks, the Central Bank may increase or decrease the agreed rate.