MercoPress. South Atlantic News Agency

Argentina finalizes currency swap with China

According to private estimates, the swap with China accounts for little less than half the Central Bank's international reserves

Argentina's Central Bank (BCRA) and the People's Bank of China (PBC) have reactivated a currency swap to help the South American country offset foreign exchange market operations and strengthen reserves.

The decision was announced Sunday after an encounter between BCRA President Miguel Pesce and his PBC colleague Yi Gang during the Bi-monthly Meeting of Central Bank Governors organized by the Bank for International Settlements (BIS) in Basel.

The swap “comprises the exchange of currencies as a reinforcement of international reserves for 130 billion yuan renminbi and a special activation for 35 billion yuan renminbi to offset foreign exchange market operations,” according to to the BCRA.

The two banks also agreed ”to deepen the use of the RMB (yuan) in the Argentine market for bilateral exchange.”

Currently, the BCRA has access to 35 billion yuan, equivalent to five billion dollars, to compensate for operations in the exchange market. The rest of the swap is to bolster international reserves.

The agreement had been on the agenda at the last bilateral meeting between Alberto Fernández and Xi Jinping.

After securing the Chinese swap, Argentina will pay Monday US$ 2.3 billion to the International Monetary Fund and private holders of bonds restructured in 2020. Payments to foreign creditors will stretch through to Jan. 30.

The roadmap of dollar payment obligations for this year totals US$ 28.769 billion in foreign currency, according to an estimate made by the Congressional Budget Office (CBO).

According to private estimates, the swap with China accounts for little less than half the Central Bank's international reserves.