$9bn currency swap with China to boost Argentina’s reserves

BUENOS AIRES: China and Argentina signed a $9 billion currency swap deal to boost the crisis-stricken South American country’s foreign currency reserves, its central bank announced on Sunday.

Struggling to recover after a currency crisis earlier this year, Latin America’s third largest economy sought the help of the International Monetary Fund — which approved a $56 billion loan package.

Now, this latest agreement will “contribute to greater financial stability and also facilitate trade” between China and Argentina, according to the bank’s statement.

A currency swap sees two parties agree to exchange a certain amount of foreign currency at a pre-determined rate, protecting against fluctuations.

Argentina’s central bank will be able to draw on these funds in an emergency.

The agreement followed the G20 summit in Buenos Aires, as Chinese President Xi Jinping was received by his Argentine counterpart Mauricio Macri for a state visit. The two countries signed 30 trade and financial agreements in total.

“We are extending cooperation on economic, agricultural, financial and infrastructure issues,” Xi told a press conference.

After Brazil, China is Argentina’s second largest trade partner.

In 2017, the relationship was firmly in Beijing’s favour: China exported $17 billion of goods to Argentina, while importing $8 billion of goods from that country. Beijing and Buenos Aires also agreed another currency swap in 2014, which provided $11 billion for Argentina’s depleted treasury reserves.

– AFP THANK YOU: Chinese central bank president Zhou Xiaochuan (C) and his Argentinian counterpart Guido Sandleris (R) shake hands after signing the deal as President Xi Jinping (L) and President Mauricio Macri (2-R) look on in Buenos Aires.