Argentina abandons dollar and will use yuan in imports from China

Following Brazil's example, Argentina will begin importing from China in yuan instead of dollars. The measure was announced by Argentina's Economy Minister, Sergio Massa, and China's ambassador to Argentina, Zou Xiaoli, last Wednesday (26).

The move is expected to preserve the Latin American country's foreign reserves, as a historic drought has caused agricultural exports to fall dramatically. As of April 24, Argentina had $36.47 billion in foreign reserves, compared with $44.6 billion at the start of this year, according to central bank data.

In January this year, the central banks of China and Argentina formalized an expansion of the currency swap pact and added a special activation of 35 billion yuan to the 130 billion in the previous agreement.

The move will allow Argentina to speed up approvals for Chinese imports, with yuan-denominated import requests being authorized in 90 days instead of the standard 180.

According to Massa, Argentina is expected to make “a volume of imports in yuan worth more than 1 billion dollars starting next month.” The Argentine government then estimates that, each month, around 790 million dollars of imports that would be paid for in US currency will be paid for in Chinese currency.

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Source: Sao Paulo Newspaper