Argentina Increases Use of Yuan for Chinese Imports

Argentina has successfully increased its use of yuan to pay for imports from China, particularly in recent days, following the renewal and expansion of a currency swap agreement with Beijing.

The use of the Chinese currency in bilateral trade amounted to 1.075 billion yuan ($150.5 million) in May this year. In the first ten business days of June, transactions worth 2.045 billion yuan ($286.3 million) were recorded, according to the Central Bank of Argentina Argentine Central Bank’s report on June 15.

This increase came after the agreement signed in early June, which renewed and expanded the swap with China for 130 billion yuan (approximately $18.2 billion) over three years. The agreement was signed between the Argentine Central Bank and the People’s Bank of China.

The fact that imports from China are paid in yuan rather than dollars helps Argentina mitigate the loss of reserves in its central bank.

According to official data, China is Argentina’s second-largest supplier of goods, with imports in the first quarter of this year totaling $3.158 billion.

See below the five most imported categories of products from China to Argentina between Jan and Apr 2023. The following chart was made with data from obtained from the maritime intelligence service DataLiner.

Top 5 imports from China | DataLiner Argentina | Jan-Apr 2023 | TEU

Source: DataLiner (click here to request a demo)

As a result of the swap agreement with China, the central bank confirmed that it could also “carry out yuan operations for financial stability” in the Argentine foreign exchange market, which is often affected by strong demand for dollars.

The Argentine monetary authority also announced that it holds its own reserves in yuan in addition to the 35 billion yuan ($4.9 billion) of available funds that can be accessed through the currency swap.

The agreement signed earlier this month allows Argentina to activate an additional 35 billion yuan from the swap, which will be released to the Argentine central bank as the initial 35 billion yuan is utilized and “financial needs and reserve reinforcement require it,” explained the monetary authority in a statement.

The Argentine Central Bank faces severe difficulties in containing the loss of monetary reserves. Since June of last year, it has imposed restrictions on access to foreign currency for import payments, which complicates the activities of companies that rely on importing intermediate goods for production.

Source: Gazeta do Povo

To read the original news report, visit: https://www.gazetadopovo.com.br/mundo/argentina-aumenta-utilizacao-do-yuan-para-pagar-importacoes-da-china/

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