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ECONOMY | 07-08-2020 10:37

Central Bank renews currency swap deal with China for another three years

Argentina and China formally sign agreement to renew existing swap line worth 130 billion yuan (US$18.7 billion).

Argentina's Central Bank has confirmed it has renewed a currency swap agreement with the Bank of China for another three years, a move that will help to maintain the country's international reserves.

The amount of the swap amounts to 130 billion yuan, around US$18.5 billion dollars, a source from the monetary authority told the AFP news agency.

The source also specified that the clause that forced Argentina to maintain its programme with the International Monetary Fund (IMF), a requirement added in 2018 by then-Central Bank chief Federico Sturzenegger, had been removed.

The swap is an exchange of currencies between two countries, which has no cost as the currencies are not use, but are accounted for in reserves, in this case Argentina's. The deal was formally signed on Thursday.

The Central Bank's international reserves amount to about 42 percent of its total reserves, which stand atUS$43.348 billion, according to official data as on Monday.

The first exchange swap agreement between the two nation's central banks was signed back in 2009, with a second agreement in 2014 that was rthen enewed in 2017. It was then supplemented by a supplementary agreement in late 2018, the Central Bank said in a statement.

"These agreements help promote the strengthening of financial conditions to support trade and investment between the two countries, promote greater financial stability and strengthen the relationship between the two central banks," the statement said.

Analysts said the renewal of the currency swap highlights growing agricultural trade between the two countries. The deal has stayed in place and been renewed by governments on both sides of the political spectrum in Argentina.

– TIMES/AFP

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