Description

This is a descriptive document that provides a comparative analysis of the Chilean foreign exchange market with respect to different economic groups between 1998 and 2001. At US$1.71 billion at the end of 2001, the value of the world’s outstanding over–the-counter foreign exchange market declined by 19%. Between 1998 and 2001, the value of outstanding derivatives also decreased, although its proportion of the value of total outstanding increased roughly from 63% to 70%. During the same period, Chile’s foreign exchange market activity rose 85%, which resulted in an outstanding of US$2.33 billion in 2001, with the derivatives market representing 27% of total activity that year. After normalizing by Gross Domestic Product (GDP) and trade flows (exports plus imports), the degree of development of the spot market turns out to be similar to those of advanced economies, while the derivatives market is in a middle point between emerging and Latin American economies.