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Chile central bank revokes reciprocal credit line with Venezuela

SANTIAGO, Sept 20 (Reuters) - Chile's central bank said on Wednesday it had revoked a reciprocal credit line with its Venezuelan counterpart, citing what it called Venezuela's failure to pay back its debts.

In a statement, Chile's central bank said it had notified Venezuela's central bank and that the line would be canceled within 10 days. The monetary authority said it has been taking steps to mitigate its exposure to Venezuela since 2014 and was currently owed $2.1 million by that country's central bank.

"The progressive deterioration of Venezuela's financial indicators and the (Venezuela central bank's) behavior in prior years under this arrangement had already motivated us to adapt measures to safeguard the Central Bank of Chile's wealth," the monetary authority said in a statement.

The Venezuelan central bank had made "intensive use" of the credit line in recent years, Chile's central bank said.

Venezuela's economy is undergoing a deep recession and its currency reserves are at their lowest levels in years as the OPEC country grapples with low oil prices and a flailing socialist model.

The country has said it will make all pending debt payments despite a set of difficulties that have resulted from financial sanctions imposed by the United States. (Reporting by Antonio de la Jara; Writing by Luc Cohen; Editing by Jonathan Oatis)