Argentina is changing the way it pays for imports from China. Instead of using US dollars, they will use yuan. Argentina’s Economy Minister, Sergio Massa, said this is to preserve the country’s dwindling foreign reserves. They will be able to pay for over $1 billion worth of imports in yuan from next month. This will replace the use of Argentina’s US dollar reserves. Massa said the decision to pay in yuan “improves the perspective of Argentina’s net reserves” and “allows us to maintain the level of activity, the volume of imports, the pace of trade between Argentina and China and the levels of economic functioning that Argentina needs” following a poor year for domestic agriculture.
Argentina’s government has accused the country’s rightwing opposition of causing a dramatic erosion of the peso against the dollar. The peso stood at 227 to the dollar at the official exchange rate on Tuesday, but it went up to more than double that on the parallel “blue” market. The slide started last week after several days of pressure on the peso in a period of pre-election uncertainty in a country with exchange controls in place to limit the effects of a financial crisis and rampant inflation of more than 100 percent year-on-year.
Economist Maria Castiglioni told the TN broadcaster that the devaluation was partly because Argentines were seeking “refuge” in the US dollar to protect their purchasing power. However, Massa said paying in yuan will help Argentina maintain its level of activity, volume of imports, and pace of trade with China.
