- Argentina will start paying for Chinese imports in yuan instead of dollars, Reuters reported.
- The country wants to preserve its dwindling greenback reserves.
- A historic drought has hit Argentina’s agricultural exports, meaning fewer dollars are coming in.
Argentina will start buying the bulk of its Chinese imports in yuan instead of dollars, as it seeks to preserve its shrinking supply of greenbacks, the nation’s economy minister said on Wednesday, according to Reuters.
“Following the worst drought in history, Argentina must keep its (foreign) reserves robust,” Sergio Massa said, per Anadolu Agency.
The South American nation will aim to buy around $1 billion of Chinese imports in April using yuan. After that, it hopes to pay for around $790 million of monthly imports in the Chinese currency.
Argentina is making the move because a crippling drought has led to a plunge in its agricultural exports. That has reduced the amount of greenbacks coming into the country, spurring officials to protect their dwindling dollar reserves.
Notably, the dollar’s dominance of global trade and investment flows faces a slew of new threats as more and more countries draft plans to boost their use of alternative currencies. China and India have pressed for settling more trade in non-dollar units, and even Europe appears to be jumping on the de-dollarization bandwagon too.
Argentina’s shift to using more yuan will likely be seen as a win for China, as it seeks to elevate its currency’s usage on the world stage and rival or supplant the dollar in global trade. Yet it’s unclear whether the country’s greater embrace of a yuan will be permanent.
Massa said the deal will enable Argentina “to work on the possibility” of accelerating imports, as yuan-based import orders are approved in 90 days instead of the standard 180 days, Reuters said.