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ECONOMY | 15-11-2022 21:36

Argentina says China will increase swap line by US$5 billion

China will increase its currency swap programme with Argentina by 35 billion yuan (US$5 billion), President Alberto Fernández tells reporters.

China will increase its currency swap programme with Argentina by 35 billion yuan (US$5 billion), President Alberto Fernández told reporters Tuesday after meeting with Chinese President Xi Jinping on the sidelines of the G20 Summit in Bali, Indonesia.

Fernández did not give further details on when the increase would take effect, nor did Economy Minister Sergio Massa, who attended the meeting with the head of state.

Currently, Argentina's swap line with China is worth 130 billion yuan (US$18.5 billion). A spokesman for Argentina's Central Bank said it had no further information at present.

The increase in the swap line will help bolster Argentina's dwindling foreign exchange reserves. The instrument, created in 2009 and renewed in 2019, currently accounts for more than half of Argentina's total stock of gross reserves.

The swap is an agreement between the two nation's central banks, whereby the People's Bank of China has a renminbi account at the Argentine Central Bank, and the latter has a peso account in China.

Argentine officials have long insisted that they do not need China's approval to use the funds, but they generally do not publish when they use them, even when net cash reserves fall to critical levels. Central Bank Governor Miguel Ángel Pesce said earlier this year that the line was "active."

In his comments to the press, Fernandez claimed that Xi told the Argentine delegation that China was making an "absolute exception" by increasing the size of the swap line.

Argentina remains excluded from international capital markets after restructuring its external debt in 2020.

Argentina's leaders had been seeking a definitive answer from Chinese officials on a possible increase in the swap line for "several months," Fernández added.

Back in February, Fernández's spokeswoman, Gabriela Cerruti, said China had agreed to increase the swap line by about US$3 billion, but a formal announcement never followed.

 

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