CHILE: Freeing the Peso

After a quarter-century of trying to set its foreign exchange rates by complex official decrees, Chile chucked the philosophy of government control over the value of the peso and went back to the supply-and-demand free rate.

Chile's experience with controls started out in 1931 as a Depression attempt to subsidize business by giving varying values to the peso (which had been traded freely at eight to the dollar). Depending on their utility, as evaluated by the bureaucracy, various imports got various rates; e.g., whisky was made proportionately more costly to import than milk. Export rates, too, were adjusted to...

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