Argentina, China Expand Currency Swap Agreement

Argentina and China expanded their currency swap agreement, which is expected to help the South American nation to increase its depleted foreign currency reserves. The government of Argentina needs to rebuild reserves to cover trade costs and future debt payments. Additional reserves are also a key objective of a debt deal with the International Monetary Fund (IMF).

Argentine President Fernandez first announced the currency swap deal with China in November last year. He said at the time that the agreement was worth $5 billion.

The heads of the Argentine and Chinese central banks “confirmed that the deal for the swap of currencies between both institutions has been activated and committed to deepening the use of (Chinese yuan) in the Argentine market,” The Central Bank of Argentina said in a statement.

China is Argentina’s second biggest trade partner after Brazil, and the second most important destination for Argentine exports.

“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 central bank statement said.

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