Argentina To Use RMB Yuan In Trade Settlements With China
Buenos Aires to drop US dollar use from US$1 billion monthly China trade
Argentina will start paying for its Chinese imports in RMB Yuan rather than US Dollars, its government announced last Wednesday. Buenos Aires said it aims to pay for around US$1 billion of April Chinese imports in Yuan instead of dollars and after that around US$790 million of monthly imports will be paid for in the Chinese currency, a government statement said.
Argentina’s Economy minister, Sergio Massa, said he hoped the switch would relieve the pressure on the country’s dwindling dollar reserves, following a meeting with the Chinese ambassador, Zou Xiaoli. Argentina is Latin America’s second largest economy after Brazil. However its currency, the Peso, has dropped 44% against the US dollar over the past twelve months while inflation has reached levels of up to 70%. Washington has declined to intervene despite it being the countries third largest export market as a depleted Peso makes its imports from Argentina less expensive. China is Argentina’s largest trade partner. however.
Argentina engaged in a US$7.2 billion currency swap with China in January this year, seeking to strengthen Argentina’s international reserves.
The move comes after the Yuan overtook the US Dollar for the first time last week to became the most widely-used currency for cross-border transactions with China. The RMB Yuan was used in 48.4% of all cross-border transactions, data showed, while the dollar’s share declined to 46.7% from 48.6% a month earlier.
Argentina is a major source of soy beans and sorghum to China, as well as beef products. In return, China exports mainly computers, and home broadcasting equipment. Argentina has also applied to join the BRICS and is a member of the Asia Infrastructure Investment Bank.
China’s trade with Argentina is about 3x that of the United States, while Beijing has also been a major investor in Argentinian BRI projects and is developing port and maritime shipping channels.
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