The Government announced the expansion of the currency swap with the People’s Republic of China for US$3,000 million, which will be added to the US$18,500 million agreed last year by the monetary authorities of both countries.
“An extension of the currency swap for US$ 3,000 million was agreed with the Republic of China”said the spokeswoman for the Presidency, Gabriela Cerruti, at her usual press conference on Thursdays at Government House.
This new Chinese disbursement that consolidates the reserves of the Central Bank (BCRA) falls within the political and economic agreements obtained during the recent visit of President Alberto Fernández to the Asian giant.
It’s more, Cerruti assured that it is also “studying to expand the possible uses” of these reserveswhich in practice represent a kind of contingent loan that has no cost as long as it is not activated.
The details
From the Central Bank they took Cerruti’s announcement with cautioninterpreting that it is “in a political agreement while the technical details continue to be negotiated” regarding the amount and timing of the entry of the yuan into the reserves of the monetary entity.
Currently the exchange of currencies between the BCRA and the Bank of the People’s Republic of China is 130,000 million yuan, equivalent to about US$18,700 million, which will reach a total of US$21,700 million once the fine print is closed. of the agreement between both monetary authorities.
Although the swap with China has no cost while it is inactive, it is accounted for within international reserves and is available for immediate use in the event of a currency crisis.
When eventually used, The swap is agreed according to the Shanghai interbank rate, the Shibor, which is currently close to 6% per year.
Cerruti indicated that the aim is not only to increase the amount, but also to “study the possibility that it can be used for other issues” and not just be an “accounting entry, which is the use it has at this time.”
For this, andhe Government is “conversing with the corresponding organisms, to see what other types of uses it can be given to this extension of the swap,” said the official.
In the 2020 renewal process, both countries agreed to eliminate the requirement to maintain an agreement with the IMF to support the swap and now It is analyzed that these currencies can be used as part of the commercial exchange between both countries.
The swap with China was originally signed in 2011, during the second term of Cristina Fernández de Kirchner as president, and was equivalent to a loan for US$10.2 billion, for three years, with the possibility of renewal, which was completed in 2014 by US $11,000 million, in 2018 for the same figure, and was expanded in 2020 to $18,700.
The agreement with China is part of Argentina’s strategy to strengthen its international reserves, either through greater coverage of Special Drawing Rights (SDR) from the International Monetary Fund (IMF), or from renewed political and commercial agreements. with the Chinese authorities.
In fact, China expressed its “firm” support for Argentina in its “efforts to preserve economic and financial stability”within the framework of the agreement that the country reached with the IMF.
“The Chinese side is willing to study with the Argentine side and other parties projects to channel IMF SDRs and expand their use, in order to strengthen economic development, financial stability and bilateral trade,” says the statement. joint declaration signed between the governments of Argentina and China last weekend.
