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ECONOMY | 02-06-2023 16:39

Argentina renews China currency swap deal to strengthen reserves

Government renews three-year currency swap line with China in bid to boost Central Bank reserves.

Argentina on Friday renewed a three-year currency swap agreement with China worth 130 billion yuan (around US$19 billion) to strengthen its reserves, the country's Central Bank announced from Buenos Aires.

The agreement was signed in Beijing by the president of the Central Bank of Argentina (BCRA), Miguel Ángel Pesce, and the head of the People's Bank of China, Yi Gang. It comes within the framework of a mission to China headed by Economy Minister Sergio Massa.

A official communiqué from the bank highlighted "the early renewal of the swap for 130 billion yuan for a period of three years" and, in addition, "an extension procedure" of the amounts with free availability to use in the immediate term "from 35 to 70 billion yuan," equivalent to around US$10 billion.

The sum is earmarked "for trade between the two countries," according to the statement.

China is Argentina's second-largest trading partner and the currency swap eases the South American country's foreign currency shortage.

Argentina will pay for imports from China in yuan via an account in that currency opened at the Central Bank. The country's first currency swap agreement with China was signed in 2009 and it has since been renewed by different governments.

The Central Bank's monetary reserves stood at some US$32.8 billion at the end of May, though the latest figures do not specify how much is sidelined for exchange market interventions.

Argentines are suffering from runaway inflation that reached 108.8 percent year-in-year in April. On parallel exchange markets the dollar trading at almost double the official rate of 249 pesos per greenback.

Argentina will go to the ballot box for presidential elections on October 22. Poverty affects around 40 percent of the population 

 

– TIMES/AFP

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