Argentina has announced that it will begin paying for Chinese imports in yuan instead of dollars, in a move aimed at addressing the country’s dwindling dollar reserves. According to a government statement, in April, Argentina plans to pay approximately $1 billion of Chinese imports in yuan, with around $790 million of monthly imports thereafter being paid in the Chinese currency.
The decision is aimed at easing the outflow of dollars from Argentina, according to Economy Minister Sergio Massa. He made the announcement during an event that followed a meeting with the Chinese ambassador, Zou Xiaoli, and representatives from various sectors.
Argentina is currently struggling with critical levels in its dollar reserves, which have been exacerbated by a historic drought that has led to a sharp drop in agricultural exports. In addition, political uncertainty ahead of this year’s elections has added to the country’s economic challenges.
To address these issues, Argentina expanded its currency swap agreement with China by $5 billion in November last year, in an effort to bolster its international reserves. The latest move to pay for Chinese imports in yuan is expected to further strengthen Argentina’s financial position.
Massa said that the agreement will allow Argentina to “work on the possibility” of advancing the rate of imports. Orders for yuan-denominated imports will now be authorized in 90 days, rather than the standard 180 days. This move is expected to facilitate trade between the two countries and contribute to Argentina’s economic recovery.