Chile Central Bank Raises Ceiling for Foreign Assets Holding

Chile’s Central Bank is raising the ceiling for pension funds’ investment in foreign assets from 30% to 35% of assets under management, effective August 9. The move follows the approval of a bill passed by Congress earlier this month amending the pension funds’ foreign investment limit. The ceiling for foreign asset holdings will be increased further to 45% within no less than nine months. Commenting on the move, Goldman Sachs said it didn’t expect the measure to have much effect on the CLP due to current conditions and the nature of pensions funds’ forex exposure. It added that “additional purchases of foreign assets would not necessarily lead to significant pension funds divestment of local fixed and variable income assets, because pension funds hold substantial amounts of liquidity in the domestic financial system.” Chile’s six pension fund managers – AFPs – reported assets under management of $101bn as of June 30.