Chilean Peso (CLP)

What Is the Chilean Peso (CLP)?

The CLP (Chilean peso), which is symbolized by $, and subdivides into 100 centavos, is the recognized currency of Chile and is issued by the Banco Central de Chile, the country's central bank.

As of August 2021, US $1 is worth roughly 790 CLP.

Understanding the Chilean Peso

The Chilean population has several colloquial names for the Chilean peso (CLP). These names include quina for the 500 peso note, first introduced in 1977, and gamba for the 100 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 the Sept. 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 USD 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.

CLP in Forex Markets

In forex markets, the CLP (Chilean peso) commonly trades with major world currencies including the 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).

According to World Bank data, Chile is an upper-income economy, and its GDP rates highly among Latin American countries. The country experienced an 8.4% annual inflation rate and had a gross domestic product (GDP) that shrank by 5.8% in 2020, which is the most current year of available data.

A Brief 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 in 1960, at a value of one 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.