Chile’s Unidad de Fomento
Carlos writes and asks:
In Chile there is something called UF (Unidades de Fomento), but how do I convert, for example, 100 UF to Chilean Pesos and then to US Dollars?
You’re right about there being a UF in Chile. According to wikipedia:
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 to inflation so that the value of the Unidad de Fomento remains constant. It was created on January 20, 1967, for the use in determining principal and interest in international secured loans for development, subject to revaluation according to the variations of inflation. Afterwards it was extended to all types of bank loans, private or special financing, purchases or investments on installments, contracts, and some special situations. Also it is used in legal standards such as the par value of stock/capitalization of companies, fines, etc. It has become the preferred and predominant measure for determining the cost of construction, values of housing and any secured loan, either private or of the Chilean government.
You can view the daily value in Chilean Pesos of the Unidad de Fomento at valoruf.cl. With that value in hand, you can use the exchange rate converter to see how much they are worth in US dollars or whichever currency you choose.
For example, today the Unidad de Fomento is worth 19,845.52 Chilean Pesos. 19,845.52 X 100 = 1,984,552 Chilean Pesos or almost $4500 US Dollars.
If you are interested in reading some more about the UF, see this blog post which has some interesting insights into the daily impact of the UF on Chileans. It states for example:
What’s remarkable is how widespread the use of the UF is. The UF is used not just for government bonds, but also for rents, house prices, long-term contracts, wages, services and big-ticket items. Its use is deeply engrained in the Chilean economy. Its value is calculated on a daily basis and is widely disseminated. All banks and newspapers carry the conversion rate of the UF to the peso. The value of the UF expressed in pesos depends on the inflation rate of the preceding two inflation data points, so you can project forward the value of the UF until the next inflation data point becomes available. That’s why the conversion rate can be calculated for some days into the future.
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