## Hedging Foreign Exchange Risk in Chile: Markets and Instruments

_IMF Working Papers, February 1, 2005_

## Source details

**Canonical URL:** [Hedging Foreign Exchange Risk in Chile: Markets and Instruments](https://www.imf.org/en/publications/wp/issues/2016/12/31/hedging-foreign-exchange-risk-in-chile-markets-and-instruments-18008)

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## Bibliographic details
- Authors: Jorge A Chan-Lau
- Published: February 1, 2005
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451860566.001

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### Overview and Purpose
- Policy makers have expressed interest in fostering the development of local foreign exchange derivatives markets to reduce risks arising from currency mismatches between assets and liabilities in the corporate sector.
- The paper:
  - assesses foreign exchange exposure in the corporate sector in Chile,
  - analyzes the current state of the foreign exchange derivatives market in Chile,
  - argues that liquid and developed foreign exchange derivatives markets can help promote financial stability.

### Key Findings and Analysis
- Foreign exchange exposure in the corporate sector in Chile is a central focus of the assessment.
- The current state of the foreign exchange derivatives market in Chile is analyzed to determine its capacity to mitigate currency mismatch risks.
- The paper presents the argument that liquid and developed foreign exchange derivatives markets can help promote financial stability.

### Policy Implications and Recommendations
- Foster the development of local foreign exchange derivatives markets to reduce currency mismatch risk in the corporate sector.
- Promote market liquidity and development of instruments to support corporate hedging needs and broader financial stability objectives.

### Subject and Keywords
- Subject: Currencies, Exchange rate risk, Foreign exchange, Hedging, Options
- Keywords: currency, derivative instrument, foreign currency, market, option contract, WP

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/hedging-foreign-exchange-risk-in-chile-markets-and-instruments-18008_