Argentina is now on its last leg in the process to finalize a new currency swap deal with China which if it goes through successfully, is set to add USD$9 billion worth of funds to the Latin American nation's dwindling reserves.
Citing the confirmation from Argentina's central bank officials, the Reuters report said that Buenos Aires and Beijing are now nearing towards the completion of the proposed currency swap deal which will extend the earlier deal agreed to by the two countries.
According to the news agency, Argentina and China's swap program has actually started way back in 2009 in a bid to help revitalize the LatAm nation's decreasing fund reserves under former President Cristina Fernandez' administration.
In 2017, President Mauricio Macri took office and few of Fernandez's flagship economic policies were carried over including the currency swap. With Macri, the center-right government has proposed to China to once again renew economic program and extend the deal for three more years, at least.
The expansion program was first reported way back in June and according to South China Morning Post, Buenos Aires was then looking for the possibility to extend the terms given the current financial turmoil that the country has been facing.
Citing the statement from Argentina's cabinet chief, Marcos Pena, the country's bilateral relations with China had been ever more fruitful after several deal renewals.
In the latest swap agreement, Argentina swept a total of more than USD$10 billion for the first three terms. Fernandez's administration, meanwhile, benefitted from the help this agreement has afforded as it was able to pay for the country's energy purchases as well as cover for its debt obligations.
On 2014, the previous government renewed the contract with the aim to boost the country's foreign reserves while at the same time allow Argentina to pay China in yuan.
True enough, Argentina's reserves have more than doubled from USD$24 billion to USD$50 billion in December 2015, during Macri's time.
With the economic cooperation further intensified between the two countries, Chinese investments continue to flow into Argentina, further fuelling its business and industry sectors, a report said. On the other hand, China benefitted greatly on Argentina's main export - soybeans.
Foreign Currency Swap
A foreign currency swap is an agreement usually signed between two foreign parties, in this case, Argentina and China, to exchange currency in order to obtain loans set in a more favorable interest rate than when done in cross-currency terms, Investopedia said.
