Argentina Shys Away From US Dollar For Trade In Chinese Currency

Posted by: lukwago J in World news April 27, 2023

On Wednesday Argentina stepped up its efforts to de-dollarise its crisis ridden economy as Buenos Aires announced that it’s starting to pay for Chinese imports in Yuan instead of dollars.

This move was seen in context of the country’s immediate need to save its dwindling dollar reserves, the Argentines have long deemed the US dollar as the one that drives their counterparts across the country crazy following an Al Jazeera report published in September 2019.

In April, Argentina aims to pay around $1 billion of Chinese imports in Yuan instead of dollars. Thereafter around $790 million of monthly imports will be paid in Yuan a government statement said.

Following last year in November, Argentina had expanded a currency swap with China by $5 billion in an effort to increase its Yuan reserves.

However that agreement allowed Argentina to work on the possibility of advancing the rate of imports with Yuan denominated import orders being authorised in 90 days rather than the standard 180 days.

The decision aims to ease the outflow of dollars,Argentina’s economy minister Sergio Massa said during an event following a meeting with the Chinese ambassador Zou Xiaoli as well as with companies from various sectors.

Argentina ‘s first agreement with IMF

This decision comes as the South American nation battles critical levels in its dollar reserves amid a sharp drop in agricultural exports caused by historic drought as well as political uncertainty ahead of elections this year.

In 1958 the then President of Argentina Arturo Frandizi implemented a so called stabilization plan which led to liberalisation of the market and included Argentina’s first agreement with the International Monetary Fund.

However soon after market’s liberalization,the Buenos Aire’s agreement with IMF sent the Argentine currency peso into free fall.

The government announced a holiday for the Argentina exchange market for 12 days.

When the stock operations resumed in January 1959 the dollar became the currency that people began perceiving as currency of prosperity instead of their own peso.

The dollar become the lens through which people learned to evaluate what was happening around them as reported by Al Jazeera in September 2019.

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