THE Central Bank of Argentina has authorized commercial banks to open customer accounts in Chinese yuan as a solution to the country’s shortage of dollar reserves.
The move is intended to stimulate the use of Chinese currency for international payments by local companies.
In addition, the country’s securities regulator recently approved the issuance of securities in yuan on the local market, reflecting Argentina’s financial challenges and China’s growing aspirations for the yuan.
The adoption of the Yuan in Argentina’s foreign exchange market has surged to a record high of 28% of total transactions due to an expanded swap line with China and diminishing dollar liquidity.
The decision to embrace the yuan aims to address the scarcity of dollars and promote the use of an alternative currency in Argentina’s financial landscape.
Meanwhile, Argentina on Friday made a 2.7 billion U.S. dollars loan repayment to the international monetary fund or IMF partly using the Chinese yuan.
This is the first time that Argentina had used yuan to repay external debt.
Aside from that, Argentina also used special drawing rights, which is an asset made by the IMF to the official reserves of supplement countries for part of the repayment.
Meanwhile, as for allowing banks to open accounts in the Chinese yuan, it can be remembered that the Central Bank of China has renewed a bilateral currency swap agreement with the Central Bank of China.
And in April, the Argentinian government announced to pay for imports from China using yuan.
According to data from the Argentine Ministry of Economy, the value of the country’s imports settled in Renminbi accounted for 19 percent of its total imports for the past April and May.
Argentina said the move would help the country bolster foreign exchange reserves, maintain its scale of imports, and facilitate its bilateral trade with China.
