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Currencies |
| CHILEAN PESO |
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| Introduction
| Overview | Structure
| History | Factors
affecting change in exchange rates | Daily
trend of Chilean peso | Weekly
trend of Chilean peso |
| Introduction |
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Chilean peso serves as the national currency for the Republic of
Chile, a South American country with other peso using neighboring
countries like Argentina, Colombia and Uruguay. The other
countries that have been using peso as their currency unit are
Dominican Republic, Mexico, Cuba and Philippines. Chile has been
using this currency unit since 1851 but the current circulating
new peso was made the official currency in 1975 when it replaced
Chilean escudo. It is depicted with the dollar sign -
"$" and according to ISO 4217 regulation, the currency
code for Chilean peso is CLP and the numeric code is 152.
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Overview
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Chile has got one of the most dynamic market oriented economy
though now it is facing gradual fall and sluggishness. In the
early 90s, Chile was one the most rapidly growing economies of the
world and was considered as an idol in context of economic
reforms. The foreign trade plays a vital factor in accelerating
the growth, especially in case of Chile, and during that time
country’s foreign trade was also on boom. Chile is one of the
top exporters of copper and the value of currency is also
dependent on the metal.
But various situations that had an hazardous effect on the economy
brought a total turnaround for the situation of the economy during
the late 90s. The value of the official currency of Chile that was
going strong until now started depreciating gradually and its only
now that it has shown some signs of recovery. The factors mostly
external shocks like Asian economic crisis, the breakdown of the
Argentinean economy, the drastic fall of the the world commodity
markets and as a result depreciation in the value of copper,
Uruguayan currency collapse and the deterioration in the value of
Brazilian real affected the value of peso adversely. Though the
economy was strong enough to take this huge amount of pressure on
it and that is why it did not collapse straight away abruptly but
the effect was slow and gradual. The economy is currently trying
to recover from the aftermaths of all these events.
In popular culture, the Chilean people call the currency banknotes
and coins with informal names such as the thousand peso banknote
is called "luka" in Chilean Spanish. Likewise, "quina"
is the name given to 500 peso coin and "gamba" for the
100 peso coin. In context of the currency restrictions, the import
and export of all the currencies is free may it be local or
foreign currency.
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Structure
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Chilean peso has a currency system based on both
coinage and paper currency having equal
importance. Due to high inflation, the use of
the subunit of the currency i.e. centavo has
been subsided and it is no more into
circulation. The smaller values in the currency,
as in most of the currencies, are denominated
using coinage and the higher values are
circulated using paper currency. Banco Central
de Chile, the reserve bank has been serving the
country since 1925 and it performs functions of
issuing currency and ensuring circulation of
money in country. The currency coins are minted
by the official mint of the country, Casa de
Moneda. The coinage in the currency is issued in
6 denominations ranging from 1 peso to 500 pesos
including 1 peso, 5, 10, 50, 100 and 500 pesos.
Except the new 100-peso coin, which has an image
of a Mapuche woman on the obverse, all the coins
show their value on the obverse sides with the
year of minting. Also the value depicted on all
the coins is surrounded by laurel wreath. The
reverse sides of the coins ranging from 1 peso
to 50-peso have an effigy of Bernardo
O’Higgins and words "Republica de
Chile" engraved around it. The reverse side
of old 100-peso coin show the coat of arms of
the country and the reverse side of the new
100-peso coin possess the coat of arms with the
face value of the coin. The 500 peso coin is
bimetallic like the new 100 peso coin and the
reverse side of the coin depicts the engraved
portrait image of Cardinal Raúl Silva Henríquez.
The 1 and 5 peso coins are octagonal, 50 peso
coin is 10 sided and the rest other coins are
circular in shape.
The banknotes in Chilean peso are issued in 6
denominations that are 500, 1000, 2000, 5000,
10000 and 20000 pesos. Also, the denomination
1000 pesos is also circulated in the form of
polymer banknote along with the paper form. The
obverse sides of the notes show portrait images
of important people in the history of Chile and
the reverse sides of the notes depict different
symbolic images. Also, separate sets of colors
have been used for each note so as to make
differentiation between them easier. The lowest
value holding Chilean peso note i.e. 500 pesos
has several shades of brown, black, green,
violet and ochre colors on it. Similarly,
several shades of green, ochre, red, brown and
blue colors are used to print the 1000 pesos
note, shades of blue, violet, carmine, ochre,
and orange colors are used for 2000 pesos
banknote and red, ochre, brown and green colors
are used to print 5000 pesos banknote. The 10000
pesos note in the currency has colors blue,
green, ochre, reddish brown and violet on its
front and backsides and the highest valued
banknote i.e. the 20000 pesos banknote is in
green, blue, reddish brown, ochre and orange
colors. Following are the details regarding the
images on the obverse and reverse sides of the
notes
- 500 pesos - Image of Pedro de Valdivia on
the obverse side and the back side of the
note depicts an illustration from a painting
by Pedro Lira symbolizing the finding of the
city of Santiago
- 1000
pesos - Portrait image of Captain Ignacio
Carrera Pinto on the front and the backside
shows the Monument to the Heroes of La
Concepción
- 2000
pesos - The picture of Manuel Rodriguez
Erdoyza is depicted on the obverse side and
a church named Iglesia de los Dominicos is
shown on the backside of the note
- 5000
pesos - The front side possesses a portrait
image of Gabriela Mistral, a Nobel Prize
winner poetess and the image on the backside
is taken from the front of her literature.
- 10000
pesos - A portrait picture of Captain Arturo
Prat Chacón is possessed by the obverse
side and the backside shows an image of
houses of the Hacienda San Agustín estate,
the birth place of Captain Arturo Prat Chacón.
- 20000 pesos - This note depicts the image
of Andrés Bello on its obverse and the
picture of main campus of the University of
Chile on its reverse side.
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| History |
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Chile is a South American country that was discovered
by the Spaniards when the new world was found in the
mid 16th century. In the initial years of its
existence, the Spanish currency unit that was Spanish
escudo at that time prevailed in the country. Peso at
that time, along with reales, served as a subunit to
escudo according to Spanish monetary system. The
country was in governance of Viceroyalty of Peru
during this period and the responsibility of supply of
currency was in private hands. In some time, in 1749
to be specific, the coins started to get officially
minted in Santiago, the denomination being in escudo
only. From the year 1817 on, independent coins were
issued the Republicans took over the control of the
mint and the phase of independent coins began. The
country boosted up its currency supply and also
started issuing Argentinean 4 and 8 reales coins.
Chilean peso, as a main currency
unit, was introduced in 1817 @ 1 peso = 8 Spanish
colonial reales and it circulated with escudos and
reales. A year later the country declared independence
but it wasn’t recognized as an independent state
until 1844. Peso was made the national currency of
Chile in 1851 and was also decimalized, centavo being
made the subunit of the peso dividing it in 100 equal
parts. In 1925, the current central bank in operation,
Banco Central de Chile, was formed and took over the
function of managing the currency from the government.
"Condor" that was equal to 10 pesos in value
was also used as a denomination in which the currency
was issued. The value of the currency was based on
gold peg but in 1932, the gold standard was dropped.
The country faced consistent inflationary pressure
during whole of the 20th century and that is why, it
had to resort to large number currency restrictions
making it difficult to have access on foreign
exchange.
Chile switched over to escudo as
its national currency once again in 1960 that was
issued @ 1 escudo = 1000 pesos or 100 condors. The
reason for this change over was that the value of peso
had fallen drastically over a period of time. The
currency lasted for about 15 years before it got
re-replaced with new peso in 1975 @ 1 peso = 1000
escudos that is still in circulation.
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| Factors
affecting the exchange rates between two countries
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The volatility in the foreign exchange rates
depends upon a numerous macro economic factors that
have different degrees of importance to different
economies of the world. Some special and exceptional
factors affecting the rates may also exist in the case
of different countries. Following are shown the common
factors on which the foreign exchange rate depends
- Flow of imports and exports between the
countries
- Flow of capital between the countries
- Relative
inflation rates
- Fluctuation limits on exchange rate
imposed by the governments of the countries
- Merchandise trade balance
- Rate of inflation in the country
- Flow of
funds between the countries for the payment of
stock and bond purchases
- Relative growth
- Short term
and long term interest rate differentials
- Cost of borrowings
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