The Central Bank is studying to activate the counter through which it receives pesos from a local importer and in exchange free yuan so that this importer pays for the inputs that come from China. The figures relating to the daily amount of transactions are not known, but the yuan does are deducted from the exchange of coins signed by the central banks of both countries.
The swap reaches the equivalent of 20,000 million dollars (one dollar today equals 6.88 yuan) and the tranche authorized by China to apply it to the payment of imports from Argentina is $5 billion. Using that part of the swap, the Central Bank of China charges it as a debt receivable. And it applies a Shibor interest rate (today at 2.6% per annum) plus a spread that would be around 6.5 points.
Successful companies deliver currency purchase permission to their trusted bank, and the latter ends up negotiating the purchase of yuan with the BCRA.
China-based firms go through the yuan window Land of fire who import parts for products that are assembled in that province, some laboratories and also companies in the automotive sector. Of the total Argentine imports, 21% comes from China. Last year the trade balance was negative by almost 7,000 million dollars.
China grants these concessions – to Argentina and other countries – because the use of the yuan in international trade is one of the strategic policies promoted by the Chinese government to compete with the markets against the dollar and the United States.
The same agreement that Argentina signed with China, the government of Alberto Fernández wanted to establish with Brazil, so that imports from that country are paid in reais. But the Central Bank of Brazil categorically rejected this possibility. The monetary body that the orthodox economist Roberto Campos Neto leads with an iron fist allegedly said Argentina did not offer no kind of warranty acceptable, in exchange for the reais that Brazil would finance through the BNDES. Campos Neto is also a staunch opponent of the idea of creating a common currency for Mercosur.
What is clear is that companies importing from China would have easier access to central bank reserves (in this case yuan), which is already far from being replicated among importers who need US dollars to settle their operations.
The extreme drought will only widen the gap between those importing from China and those importing from other sources. The lack of reserves is what is driving the agricultural dollar which would be known this Wednesday.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.