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Argentina renews US$19 billion China currency swap, brushing off Washington’s pressure
🇨🇳 China /Economy & Trade

Argentina renews US$19 billion China currency swap, brushing off Washington’s pressure

From South China Morning Post · () English

Summarized and contextualized by DistantNews.

At a glance

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  • Argentina's central bank and China's People's Bank of China extended a US$19 billion currency swap line to 2031.
  • The renewal ends speculation about President Javier Milei's stance on the deal, which he previously vowed not to conduct with communist nations.
  • The extended term aims to provide greater predictability for Argentina's financial tools and foreign reserves.

Argentina's central bank and its Chinese counterpart have renewed a US$19 billion currency swap line, extending the agreement until 2031. The deal, initially set to expire imminently, will now run two years longer than any previous renewal since its inception in 2009. This decision resolves months of speculation surrounding President Javier Milei's intentions. Milei had campaigned on a promise to avoid business with communist countries and is widely viewed as a close ally of former US President Donald Trump.

The Argentine central bank stated that the longer term will offer "greater predictability over the continuity of this tool." A currency swap functions as a standing credit line between two central banks. Argentina can access yuan from China's People's Bank of China by providing pesos in exchange, with the obligation to repay the amount with interest at a later date. While the full 130 billion yuan is counted towards Argentina's foreign reserves, it cannot be utilized until a portion is activated, at which point it becomes a debt.

greater predictability over the continuity of this tool

— Argentine central bankExplaining the benefit of the extended currency swap deal.
DistantNews Editorial

Originally published by South China Morning Post. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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