I travelled a lot of times to Chile and I know a lot the south of this country.
I like Osorno city because is quiet, beautiful and cheap, with the best prices of the chillean south. I recommend to buy food in supermarkets and to exchange money in an store called Real, in Ramirez street, principal street of the city. They have the best rates of the chillean south in travellers checks and different currencys. Much better than money exhanges in Valdivia or Puerto Montt.
Go to Osorno, is better than Valdivia or Puerto Montt.