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Argentina’s Economy Minister Sergio Massa declared on Wednesday that the country will attempt to pay for the majority of its monthly imports from China in yuan rather than US dollars. Last year, Buenos Aires and Beijing inked a currency swap arrangement to stop the outflow of foreign cash from Argentina’s central bank.
Argentina’s second largest commercial partner after Brazil, and the second largest destination for Argentinian exports, is China. According to the United Nations database on international commerce, Argentina’s total imports from China in 2021 will be roughly $13.5 billion.
Buenos Aires will pay the equivalent of $1 billion in yuan for Chinese goods and services this month, with $790 million in yuan paid for monthly imports thereafter, according to Massa. The currency swap deal, which was expanded and finalised earlier this year, also allows Argentine exporters to settle in yuan or dollars, helping to balance the central bank’s foreign currency flows.
Earlier this month, on a visit to China, Brazilian President Luiz Inacio Lula da Silva urged developing countries to abandon the US currency in favour of their own currencies. India is likewise attempting to settle trade with China in its own currency or yuan, while Russia has begun to accept payments for its goods from a variety of countries in rubles and Chinese yuan.
According to Stephen Jen, CEO of London-based asset management firm Eurizon, the dollar’s proportion of global reserves plummeted ten times quicker last year than over the previous two decades. Russia’s US dollar and Euro-denominated assets have been frozen overseas, and Moscow has been cut off from the global financial messaging system known as SWIFT.
US Treasury Secretary Janet Yellen has recognised that the dollar’s function as the world reserve currency may be diminishing as a result of Washington utilising its dominance over the global financial system to accomplish geopolitical aims through sanctions.