Argentina will start paying for Chinese imports in yuan rather than dollars, its government announced Wednesday.
Buenos Aires said it aims to pay for around $1 billion of April Chinese imports in yuan instead of dollars and after that around $790 million of monthly imports will be paid for in the Chinese currency, a government statement said.
It’s hoped the switch will relieve the pressure on the country’s dwindling dollar reserves, Argentina’s Economy minister Sergio Massa admitted following a meeting with the Chinese ambassador, Zou Xiaoli.
The decision comes as the South American nation battles critical levels in its dollar reserves amid a sharp drop in agricultural exports caused by a historic drought, as well as political uncertainty ahead of elections this year.
In November last year, Argentina expanded a currency swap with China by $5 billion, seeking to strengthen Argentina’s international reserves.
The move comes just a day after it emerged the yuan overtook the dollar for the first time last month to became the most widely-used currency for cross-border transactions in China.
The yuan was used in 48.4% of all cross-border transactions, data showed, while the dollar’s share declined to 46.7% from 48.6% a month earlier.
- Reuters with additional editing by Sean O’Meara