Currency - Unidad de Fomento

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Unidad de Fomento

The Unidad de Fomento (UF) is a Unit of account that is used in Chile. The exchange rate between the UF and the Chilean peso is constantly adjusted for inflation so that the value of the Unidad de Fomento remains almost constant on a daily basis during low inflation.

It was created on 20 January 1967, for the use in determining principal (monetary item) and interest (constant real value non-monetary item) in international secured loans (monetary items) for development, subject to revaluation according to the variations of inflation. Afterwards it was extended to all types of bank loans (monetary items), private or special financing (monetary items), purchases (trade debtors/trade creditors being constant real value non-monetary items) or investments on installments, contracts (constant real value non-monetary items), and some special situations. Also it is used in legal standards such as the par value of stock/capitalization (constant real value non-monetary items) of companies, fines (payables being constant real value non-monetary items), etc.

It has become the preferred and predominant measure to determine the cost of Real Estate (variable items valued at Historical Cost being updated), values of housing (historical variable real value non-monetary items being updated) and any secured loan (monetary item), either private or of the Chilean government. Individual payments are made in Chilean pesos (the country's legal tender), according to the daily value of the UF.

For historical and current values of the Chilean Unidad de Fomento (UF), see government's Central Bank of Chile.

A similar currency unit for use generally in payment of taxes, fines, or customs duty is the Unidad Tributaria Mensual (UTM) (literally: monthly tax unit).

From its creation in 1967, each calendar quarter, the UF value of 100 Chilean escudo would be quoted based on the Consumer Price Index (CPI) of the past three months, which would be the official rate for the following quarter. In October 1975 with the currency changeover to pesos, the value of 1 UF was quoted in pesos and readjusted monthly. In July 1977 it was calculated daily by interpolation between the 10th of each month and the 9th of the following month, according to the monthly variation of the CPI. Since 1990 the Central Bank of Chile has determined its value. The values of the CPI are officially kept by the Instituto Nacional de Estadísticas de Chile (National Statistics Institute of Chile).

For historical and current values of the Chilean CPI (abbreviated as IPC in Spanish), see Banco Central de Chile Statistics Database

Historical values of the UF as of 31 December each year (unlike below, in Chile numbers are written with a decimal comma and a dot to separate thousands):

* Constant Item Purchasing Power Accounting

* Unidade Real de Valor

Country

Chile

Chile, officially the Republic of Chile , is a South American country occupying a long, narrow strip of land between the Andes to the east and the Pacific Ocean to the west. It borders Peru to the north, Bolivia to the northeast, Argentina to the east, and the Drake Passage in the far south. Chilean territory includes the Pacific islands of Juan Fernández, Salas y Gómez, Desventuradas, and Easter Island in Oceania. Chile also claims about 1250000 km2 of Antarctica, although all claims are suspended under the Antarctic Treaty.

The arid Atacama Desert in northern Chile contains great mineral wealth, principally copper. The relatively small central area dominates in terms of population and agricultural resources, and is the cultural and political center from which Chile expanded in the late 19th century when it incorporated its northern and southern regions. Southern Chile is rich in forests and grazing lands, and features a string of volcanoes and lakes. The southern coast is a labyrinth of fjords, inlets, canals, twisting peninsulas, and islands.

Language

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