The Argentinian government recently revealed that nearly 20% of authorized imports in April and May were settled using the Chinese yuan. This amounted to $2.72 billion in Chinese yuan, a move aimed at preserving the country’s dollar reserves by taking advantage of the Chinese swap line. Matias Tombolini, the Commerce Secretary, emphasized the positive impact of this development on Argentina’s economic outlook.
Argentina Makes Progress in Shifting Away from the Dollar for Imports
Argentina is making significant strides in diversifying its import settlement methods away from reliance on the US dollar. The Commerce Secretariat’s data indicates that imports settled in Chinese yuan reached nearly 20% during the months of April and May, with authorized transactions amounting to $2.72 billion. Commerce Secretary Matias Tombolini lauds this progress as it enhances Argentina’s economic situation.
“The option to settle imports in yuan strengthens our reserves and enhances the net reserves outlook, granting us more freedom and capacity to intervene against those who engage in economic speculation.”
Facing considerable currency devaluation and inflation, Argentina tapped into a $10 billion Chinese swap line established during a bilateral meeting between President Alberto Fernandez and President Xi Jinping in 2022. The extension of the swap line to nearly $20 billion in June, with $10 billion available for unrestricted management, enabled Argentina to capitalize on these resources and integrate the yuan as a significant currency in its internal import settlement system.
Dollar Still Dominant, but Argentine Government Aims for Change
Despite the progress made with the Chinese yuan, the US dollar remains the dominant currency for international transactions, accounting for 62% of all imports during the April-May period. The Argentinian government intends to promote yuan-settled negotiations due to its limited dollar-denominated foreign reserves, which hit their lowest level since 2016 in May.
The Central Bank of Argentina views this situation positively, citing the growth in commercial operations conducted in local currencies facilitated by the Chinese swap line.
However, Economy Minister Sergio Massa has planned a trip to the United States to negotiate a series of disbursements from the International Monetary Fund (IMF) to bolster central bank reserves and maintain a healthy cash flow. Argentina is also pursuing membership in the New Development Bank, also known as the BRICS bank, to secure additional funding.
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Frequently Asked Questions (FAQs) about de-dollarization
What percentage of imports in Argentina were settled using the Chinese yuan in April and May?
19% of all imports authorized in Argentina were settled using the Chinese yuan in April and May.
How much money in Chinese yuan was approved for import payments in Argentina during that period?
$2.72 billion in Chinese yuan was approved for import payments in Argentina during April and May.
What is the purpose of using the Chinese yuan for import settlements?
Using the Chinese yuan helps preserve the dollar reserves of Argentina and improves the economic outcome for the country by diversifying its currency options.
What is the current dominant currency for settling international transactions in Argentina?
The US dollar is still the predominant currency, accounting for 62% of all imports made during the April-May period.
Why is Argentina interested in growing yuan-settled negotiations?
Argentina aims to reduce its reliance on the US dollar due to its low level of dollar-denominated foreign reserves and seeks to enhance its economic stability by diversifying its currency settlements.
What other measures is Argentina taking to boost its reserves and maintain cash flow?
Argentina’s Economy Minister has scheduled a trip to the US to negotiate disbursements from the International Monetary Fund (IMF) and the country is also pursuing membership in the New Development Bank (BRICS bank) for additional funding.
More about de-dollarization
- Argentina’s Commerce Secretariat
- Central Bank of Argentina
- International Monetary Fund (IMF)
- New Development Bank (BRICS bank)