The South American nation can now augment its depleted foreign currency reserves thanks to the formalization of an expansion of a currency swap agreement between Argentina and China, the Argentine central bank announced on Sunday.
The government of Argentina must increase reserves in order to pay for trade expenses and upcoming debt obligations. Increasing reserves is a main goal of a significant debt agreement with the International Monetary Fund (IMF).
In November of last year, President Alberto Fernandez announced the deal and stated that it was valued at $5 billion.
The central bank stated in a statement that the leaders of the Argentine and Chinese central banks “confirmed that the contract for the exchange of currencies between both institutions has been implemented and committed to extending the use of (Chinese yuan) in the Argentine market.”
China is Argentina’s second-largest trading partner after Brazil and the country ranks second in terms of export importance.
“The swap comprises the exchange of currency for reinforcement of international reserves of 130 billion yuan and a special activation of 35 billion yuan to compensate operations on the foreign exchange market,” the statement read.
