China agrees US$9b currency swap with Argentina

Buenos Aires

CHINA and Argentina signed a US$9 billion currency swap deal to boost the crisis-stricken South American country's foreign currency reserves, its central bank announced on Sunday.

Struggling to recover after a currency crisis earlier this year, Latin America's third-largest economy sought the help of the International Monetary Fund (IMF) - which approved a US$56 billion loan package.

This latest agreement will "contribute to greater financial stability and also facilitate trade" between China and Argentina, according to the bank's statement.

A currency swap sees two parties agree to exchange a certain amount of foreign currency at a pre-determined rate, protecting against fluctuations.

Argentina's central bank will be able to draw on these funds in an emergency.

The agreement followed the Group of 20 summit in Buenos Aires, as Chinese President Xi Jinping was received by his Argentine counterpart Mauricio Macri for a state visit.

The two countries signed 30 trade and financial agreements in total.

"We are extending cooperation on economic, agricultural, financial and infrastructure issues," Mr Xi told a press conference.

After Brazil, China is Argentina's second-largest trade partner. In 2017, the relationship was firmly in Beijing's favour: China exported US$17 billion of goods to Argentina, while importing US$8 billion of goods from that country.

Beijing and Buenos Aires also agreed another currency swap in 2014, which provided US$11 billion for Argentina's depleted treasury reserves. AFP