Dollar and yuan. Photo: Disclosure

Argentina will start paying for Chinese imports in yuan instead of dollars, the government announced on Wednesday, a move aimed at easing the country’s dwindling dollar reserves.

In April, it intends to pay about US$1 billion of Chinese imports in yuan instead of dollars, and later, about US$790 million of monthly imports will be paid in yuan, a government statement said.

The decision aims to facilitate the outflow of dollars, said the Minister of Economy of Argentina, Sergio Massa, during an event following a meeting with the Chinese ambassador, Zou Xiaoli, and with companies from different sectors.

The decision comes as the South American country faces critical levels of its dollar reserves amid a sharp drop in agricultural exports caused by a historic drought, as well as political uncertainty ahead of this year’s elections.

In November last year, Argentina expanded a currency swap with China by US$5 billion, seeking to strengthen Argentina’s international reserves.

The deal will allow Argentina to “work out the possibility” of raising the import tax, Massa added, with yuan-denominated import orders being cleared in 90 days instead of the standard 180 days.

Originally posted on Cafezinho

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