Argentina and China renewed their currency swap line today for US$ 19 billion over the next three years, a US$ 1 billion increase on the current deal, which will go directly to bolster the country’s reserves. As the Herald anticipated a week ago, the agreement also includes doubling the government’s free access amount, taking it from the current US$ 5 billion to US$ 10 billion, which can be used for trade between both countries. 

Regarding the interest rate, a senior official told the Herald it will not be made public because it is a contract between two central banks. However, they explained that it uses two interest rates as reference, the Shibor rate and the IMF rate. The agreement’s surcharge however is unknown.

The agreement was signed by Argentine Central Bank President Miguel Pesce and his Chinese counterpart, Yi Gang, with Argentine Economic Minister Sergio Massa also present. The previous currency swap deal, which had been agreed upon in 2020, was set to expire in August. The first agreement between both Central Banks was signed in 2009. The second one came in 2014, and was later renewed in 2017, with a supplementary added in 2018.   

A commercial trade mechanism that will allow Chinese companies doing business in Argentina to trade and invest directly in yuan announced on Wednesday by Economy Minister Sergio Massa is scheduled to start today.

Until now, Chinese companies had to use intermediates such as purchasing dollars with the Chinese currency or through financial dollar rates like the blue chip swap rate.