Argentina abandons the dollar in favor of the yuan to pay for its Chinese imports

2023-04-27T13:12:43.077Z

Highlights: After Brazil in March, Argentina will pay for its Chinese imports in yuan. Buenos Aires therefore makes infidelities to the dollar in favor of the Chinese currency. The activation of a monetary exchange mechanism, which Beijing and Buenos Aires already had, should also relieve some of the pressure on the Latin American country's foreign exchange reserves.Import purchases in yuan are announced at a time when the peso is crumbling dramatically against the dollar. Due to runaway inflation, the greenback acts as a safe haven for Argentines.

After Brazil in March, Argentina will pay for its Chinese imports in yuan. Buenos Aires therefore makes infidelities to the dollar in favor of the Chinese currency. From May, Argentina will be able to...

Argentina abandons the dollar in favor of the yuan to pay for its Chinese imports

Argentina will now pay for its Chinese imports in yuan rather than dollars, like the other South American giant, Brazil. © Chinatopix via AP

Text by: RFI Follow

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After Brazil in March, Argentina will pay for its Chinese imports in yuan. Buenos Aires therefore makes infidelities to the dollar in favor of the Chinese currency. Starting in May, Argentina will be able to pay the equivalent of a billion dollars worth of Chinese imports directly in yuan. If Beijing seeks to internationalize its currency, what does Argentina gain?

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Maintain activity level and import volume ", this is the stated objective of the Argentine government. For importers, buying in yuan will speed up trade. They are faster to obtain because they are less in demand, explains the newspaper Clarín.

The activation of a monetary exchange mechanism, which Beijing and Buenos Aires already had, should also relieve some of the pressure on the Latin American country's foreign exchange reserves. This abandonment of the dollar in transactions with China improves the outlook for Argentina's net reserves. International reserves have deteriorated further since the beginning of 2022, from 44 to 36 billion dollars.

The dollar remains the safe haven of Argentines

The drought that the country is enduring is exacerbating the tension. Less agricultural production means less exports and more than $15 billion that will not enter the country. However, the agreement negotiated with the IMF limits its room for manoeuvre.

Import purchases in yuan are announced at a time when the peso is crumbling dramatically against the dollar. Due to runaway inflation, the greenback acts as a safe haven for Argentines. In informal transactions, the dollar traded at the beginning of the week for 500 pesos against 227 for a dollar at the official rate, losing 20% in one week.

Argentina abandons the dollar in favor of the yuan to pay for its Chinese imports

Argentina abandons the dollar in favor of the yuan to pay for its Chinese imports

The dollar remains the safe haven of Argentines

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