Argentina announced this Wednesday that it has agreed with China pay, through yuan and not US dollars, imports from this Asian country. This measure seeks to mitigate the loss of reserves of the Argentine Central Bank.
“This improves the outlook for Argentina’s net reserves,” highlighted the Argentine Economy Minister, Sergio Massa, in a meeting with the Chinese ambassador in Buenos Aires, Zou Xiaoli, and representatives of companies from various sectors.
As agreed, Argentine companies will pay with yuan for their imports from China made in April for US$1.07 billion, and will do the same in May, with operations scheduled for that month for US$790 million.
According to official data, China is the main origin of imports made by Argentina. Its purchases in 2022 reach US$17,502 million, equivalent to 21% of the total of this type of operations carried out by the South American country last year.
The payment with yuan instead of dollars will be made by virtue of the extension of the “swap” (currency exchange agreement) that Argentina and China signed last November.
Massa recalled that, due to “the worst drought in its history”, with a drop in exports of US$15 billion this year, the Argentine economy “faces the challenge of keeping its reserves functioning and strengthened.”
Argentina will trade in yuan with China
The Argentine Central Bank is facing serious difficulties in trying to contain the loss of monetary reserves and, in fact, has maintained restrictions on access to foreign currency to pay for imports since June of last year. This complicates the activity of companies that need to import intermediate goods for production.
Massa pointed out that this scenario “forces us to rethink” the refinancing agreement signed with the International Monetary Fund (IMF) in 2022. Among his goals, this commitment includes an accumulation of reserves, and also “redefine the work strategy” with importers and exporters.
The agreement with China announced this Wednesday comes at a time of strong exchange rate tension in Argentina, with record prices of the US currency in parallel markets.
Massa stressed that the agreement with China grants Argentina, among other things, greater freedom and capacity for action by the Central Bank these days, in which the Government had to “make the decision to intervene against those who overspeculated” in the markets. exchangers.
Source: Larepublica
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