According to a statement from the Argentine central bank, Argentina and China have formalised the expansion of a currency swap agreement, allowing the South American nation to boost its dwindling foreign exchange reserves.
Argentina’s government must rebuild reserves to cover trade costs and future debt repayments, and increased reserves are a key goal of a major debt agreement with the International Monetary Fund (IMF).
President Alberto Fernandez announced the deal in November of last year, stating that it was worth $5 billion at the time.
The heads of Argentina’s and China’s central banks “confirmed that the deal for currency swaps between both institutions has been activated and committed to deepening the use of (Chinese yuan) in the Argentine market,” the central bank said in a statement.
After Brazil, China is Argentina’s second-largest trade partner and the second most important destination for Argentine exports.
“The swap consists of a currency exchange for the reinforcement of international reserves of 130 billion yuan and a special activation of 35 billion yuan to compensate for operations on the foreign exchange market,” according to the statement.
