China Ignores Miley’s Rhetoric, Gives Argentina $35 Billion Bailout

China has agreed to renew 35 billion yuan (about US$5 billion) worth of currency swap tranches with Argentina central bank until July 2026, the monetary authorities of the South American country announced on Wednesday.

According to a statement from the Central Bank of Argentina, the institution will gradually reduce the activated value of the swap during this period, with the aim of fully deactivating it by the end of the contract.

Authorities said the agreement, originally signed in 2020 and activated last year, is crucial for managing balance of payments flows at a critical time.

China first signed a renminbi-based swap deal with Argentina in 2009 and has since expanded the deals on at least three occasions.

When Beijing agreed to activate the swap in 2023, Argentina was facing a severe dollar shortage, exacerbated by a devastating drought that hit soybean plantations hard and sent exports to a 20-year low .

However, there was uncertainty over whether China would authorize another renewal due to the contentious relationship between the two countries since the self-described radical libertarian Javier Miley took office as president in December.
Miley vowed earlier to cut ties with Beijing in favor of what he described as the civilized side of the world. He has also cut off negotiations to buy Chinese JF-17 fighter jets in favor of second-hand US F-22 fighter jets from Denmark.

The looming expiration of the exchange without details on its renewal intensified market turbulence in recent weeks.

Strained relations between Milei and the Chinese government left open the possibility that Beijing could delay the renewal and force Argentina to pay at least part of the $5 billion.

Without the renewal of the swap, Buenos Aires would have to cover at least part of the amount, depleting the country’s already low foreign exchange reserves and hampering the Central Bank’s ability to receive new disbursements.

The President of Argentina Javier Milei. Photo: Reuters

Those fears halted the uptrend in Argentine bonds, which had performed well since the start of the year, sending them down more than 10 percent between late May and early June, local newspaper Clarn reported.

The extension until July 2026 of the activated part of the currency exchange will allow the Central Bank of Argentina to continue to reduce the risks it faces during the current economic transition, which began in December 2023, towards a stable and stable monetary regime and exchange rate. , it was said.

In this way, the cooperation between the two monetary institutions started in 2009 has been renewed and the financial and economic ties between the two countries have been strengthened.

Argentina’s Foreign Minister Dina Mondino briefly reacted to the news on social media platform X, announcing the renewal of the exchanges and adding Chinese and Argentine flag emojis, as well as a handshake emoji.

Mondino visited Beijing in April, where she met with China’s Vice President Han Zheng, primarily to discuss exchange agreements.

#China #Ignores #Mileys #Rhetoric #Argentina #Billion #Bailout
Image Source : www.scmp.com

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top