What is CLP (Chilean Peso)
The CLP (Chilean peso), is the national currency of Chile and subdivides into 100 centavos. The issuance of banknotes is through the Banco Central de Chile, the country's central bank. The representation of the CLP is by the symbol “$.”
In forex markets, the CLP (Chilean peso) commonly trades with major world currencies including the U.S. dollar (USD), Canadian dollar (CAD), Australian dollar (AUD), euro (EUR), British pound (GBP) and Japanese yen (JPY). It also trades regularly against the Brazilian real (BRL).
BREAKING DOWN CLP (Chilean Peso)
The Chilean population has several colloquial names for the Chilean peso (CLP) These names include quina for the five-hundred peso note, first introduced in 1977, and gamba for the one-hundred peso note. The largest denomination of CLP is the 20,000-peso note, released in 1998. In 2011, the Banco Central de Chile began circulating more secure polymer banknotes and only a few remain printed on cotton infused paper.
The peso’s valuation has changed several times since its introduction. Until 1979, the central bank held the currency within a crawling band of exchange rate values. Between 1979 and 1982, the central bank pegged the peso to the U.S. dollar. Overvaluation of the peso caused by a combination of the dollar peg and high-interest rates caused the country to run up its debt, leading to an economic crisis in 1982. Associated inflation made centavo coins obsolete in 1984.
The Central Bank returned to a system of crawling currency bands to value the currency between 1984 and 1999. The currency’s value has floated freely since then, though the Chilean government allows occasional intervention in markets to control extreme volatility. The currency’s value has remained relatively stable since, aside from actions by the central bank following September 11, 2001, terrorist attacks in New York and volatility following Brazil’s chaotic 2002 election cycle. The central bank also took action to rein in the currency’s strength against the U.S. dollar during 2008 and 2011.
The currency fell precipitously in 2015 on market fears of a drop in copper prices, but the central bank declined to intervene at that time.
According to World Bank data, Chile is an upper-income economy, and its GDP rates highly among Latin American countries. The country experiences 4.7% annual inflation rate and has a gross domestic product (GDP) of a 1.5%, as of 2016, which is the most current year of available data.
History of the Chilean Peso
Historically, the term peso first referred to a Spanish coin named the eight-real coin and saw circulation in Chile beginning in 1817. By 1851 the peso was equal to five French francs but was made up of a smaller amount of gold. The first paper banknotes appeared in the early 1840s, printed by some private banks which continued until 1898. The first government-issued convertible paper currency came out in 1881. The Banco Central de Chile became the country’s sole issuer of currency in 1925.
Chile introduced the escudo (CLE) in 1960, at a value of 1 escudo per 1,000 old pesos. Fifteen years later, in 1975, the central bank established a new Chilean peso, the CLP and began replacing the escudo at an exchange rate of 1 peso for 1,000 escudos.