China and Argentina formally extended their currency swap agreement

The South American nation can now augment its depleted foreign currency reserves thanks to the formalization of an expansion of a currency swap agreement between Argentina and China, as per the announcement made by the Argentina central bank.

The government of Argentina must increase reserves in order to pay for trades expenses and upcoming debt obligations. Increasing reserves is the main goal of a significant debt agreement with the International Monetary Fund (IMF).

In November of last year, President Alberto Fernandez announced the deal and stated that is was valued at $5 billion. The central bank stated in a statement that the leaders of the Argentina and Chinese central banks confirms that the arrangement for the swap of currencies between both institutions has been activates and committed to extending the use of the use of the Chinese yuan in the Argentina market.

China is Argentina’s second-largest trading partner after Brazil and the country ranks second in terms of export importance. The swap includes an exchange of currency for an additional 130 billion yuan in international reserves as well as a special activation of 35 billion yuan to cover transactions on the foreign exchange market, according to the announcement.