To conserve its decreasing foreign reserves, Argentina will pay for Chinese goods in yuan rather than US dollars, Economy Minister Sergio Massa said on Wednesday.
At a meeting with China's ambassador Zou Xiaoli in Buenos Aires, Massa said that the South American nation would be able to “program a volume of imports in yuan worth (the equivalent of) more than $1 billion from next month.”
This would “replace” Argentina's usage of its US currency reserves.
Tuesday, the government of Argentina demanded an inquiry after charging the right-wing opposition of contributing to a sharp decline in the value of the peso relative to the dollar.
Tuesday's official exchange rate for the peso was 227 to the dollar, but the “blue” market, a parallel market, saw the peso rise to more than twice that level.
After many days of pressure on the peso amid election-related ambiguity in a nation with currency restrictions in place to mitigate the consequences of a financial crisis and raging inflation of more than 100% year-over-year, the decline began last week.
The depreciation, according to economist Maria Castiglioni, was partially brought on by Argentines seeking “refuge” in the US dollar to preserve their buying power.
The choice to pay in yuan, according to Massa, “improves the perspective of Argentina's net reserves.”
Along with that, it “allows us to maintain the level of activity, the volume of imports, the pace of trade between Argentina and China and the levels of economic functioning that Argentina needs” after a difficult year for local agriculture and consequently exports due to a protracted drought.