Over 500 companies in Argentina are now expressing interest in paying for imports using the Chinese yuan, as the scarcity of U.S. dollars continues to pose challenges. In response to the growing demand, the Argentine customs agency has disclosed that businesses from various sectors, including electronics, auto parts, textiles, oil, and mining, have submitted requests to adopt the Chinese currency for their import transactions, according to a recent report by Bloomberg.
The employment of Chinese yuan has reached an unprecedented level in Argentina, driven by the persistent shortage of U.S. dollars. The central bank has confirmed that import payments authorized in Chinese yuan have amounted to a substantial $2.9 billion. Shedding light on the situation, Marcelo Elizondo, a trade economist in Buenos Aires, elaborated:
“Given the absence of dollars at the central bank, the emergency aid provided by China is crucial. For Argentina, relying on the Chinese currency represents an urgent measure, whereas for China, it presents an opportunity to exert geopolitical influence.”
Among the companies seeking to leverage the Chinese yuan for import payments is Whirlpool Corp., a prominent American appliance manufacturer. Having invested $52 million in a new factory outside Buenos Aires, the company aims to mitigate disruptions and ensure continued importation of materials. Juan Carlos Puente, President of Whirlpool Latin America, emphasized the significance of exploring new avenues for trade flows:
“Halting factory operations intermittently is detrimental to our business, productivity, and quality. We are actively working on how to capitalize on this emerging channel to sustain our import activities.”
Notably, Argentine companies such as Mirgor and Newsan have already made import payments totaling $630 million in Chinese yuan between May and August, as reported by the country’s customs agency.
To alleviate the impact of the U.S. dollar shortage, China recently granted Argentina access to over half of an $18 billion currency swap line, a mechanism established in 2009 to bolster trade and enhance foreign reserves during liquidity crises.
“With the dwindling availability of the U.S. dollar, the only viable option remaining for Argentina is to tap into the yuan through the China swap line.”
Recent data from Mercado Abierto Electrónico, a prominent Argentine exchange, indicates that the daily proportion of Chinese yuan transactions in the country’s foreign currency market has reached an all-time high of 28%. This marks a significant surge compared to the previous month, during which yuan transactions accounted for a maximum of 5%.
Frequently Asked Questions (FAQs) about import payments
Why are companies in Argentina requesting to pay for imports using Chinese yuan?
Companies in Argentina are seeking to pay for imports using Chinese yuan due to the scarcity of U.S. dollars in the country. The central bank lacks dollars and is relying on emergency aid from China. The Chinese yuan provides an alternative currency for import payments when dollars are limited.
How many companies in Argentina have requested to use Chinese yuan for import payments?
Over 500 companies in Argentina, spanning various industries such as electronics, auto parts, textiles, oil, and mining, have requested to use Chinese yuan for their import payments.
Import payments authorized in Chinese yuan have amounted to $2.9 billion in Argentina, as reported by the country’s central bank. This reflects the significant usage and reliance on the Chinese currency for import transactions.
Which companies in Argentina have already made import payments in Chinese yuan?
Companies such as Whirlpool Corp., Mirgor, and Newsan are among the Argentine companies that have made import payments totaling $630 million in Chinese yuan between May and August, according to the customs agency.
What is the significance of the currency swap agreement between China and Argentina?
China has granted Argentina access to over half of an $18 billion currency swap line. This bilateral swap agreement, which has been in place since 2009, serves as a contingency measure to enhance foreign reserves during periods of liquidity crises. It helps bolster trade between the two countries and provides Argentina with an alternative source of liquidity when U.S. dollars are scarce.
How has the usage of Chinese yuan in Argentina’s foreign currency market changed?
More about import payments
- Bloomberg: Yuan Usage Soars in Argentina: Over 500 Companies Request to Pay for Imports in Chinese Currency, Report
- Mercado Abierto Electrónico: Official Website
- Whirlpool Corporation: Official Website
- Argentina Central Bank: Official Website
- China’s Ministry of Foreign Affairs: Argentina-China Bilateral Swap Agreement