Sunday, January 21, 2007

Foreign exchange hedging in Chile

Foreign exchange hedging in Chile
Jorge A Chan-Lau jchanlau@imf.org

Policy makers have expressed interest in fostering the development of local foreign exchange derivatives markets with a view to reducing risks arising from currency mismatches between assets and liabilities in the corporate sector. This paper assesses foreign exchange exposure in the corporate sector in Chile, analyses the current state of the foreign exchange derivatives market in Chile, and argues that liquid and developed foreign exchange derivatives markets can help promote financial stability.

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