President Javier Milei will travel to China to meet for the first time with his counterpart from the Asian giant, Xi Jinping, after the renewal of the swap for US$5 billion until July 2026. The announcement of the renewal was made by the Central Bank through a statement in which it also explained that will gradually reduce the amount activated during the next 12 months.
The currency agreement between Argentina and the Asian country had scheduled expirations in the coming weeks. Were US$2954 million that were due this month and another US$1.97 billion that had to be paid in July. For this, the BCRA explained that will gradually reduce the activated amount of the swap during the next 12 months. “In this way and coinciding with the expiration date of the current currency swap agreement, the aforementioned tranche will be completely deactivated in mid-2026,” indicated the BCRA.
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The monetary authority announced: “The activation of RMB 35 billion in 2023 allowed the BCRA to manage balance of payments flows at critical times for the domestic economy. The confirmation of the extension of the entire amount with the PBOC reinforces the commitment assumed by the current management of the BCRA of overcome the external payment crisis, fully respecting the contractual commitments previously agreed with all its counterparts.”
The Central Bank explained that the extension until July 2026 of the activated tranche of the currency swap will allow the BCRA to reduce “the risks it faces during the current economic transition towards a consistent and sustainable monetary and exchange regime.” The organization led by Santiago Bausili He said that in this way “the cooperation between both monetary institutions, which began in 2009, has been renewed and the financial and economic ties between both countries have been reinforced.”
The keys to the swap between Argentina and China
He swap between China and Argentina It started in 2009. Then, in 2014, a second agreement was signed that was renewed three years later and in 2018 a supplementary agreement was closed. In August 2020, the understanding was signed and renewed again in June from 2023 for three more years. That is to say, until August 2026, although one of the sections of free availability had to be ratified. This is what was confirmed this Wednesday afternoon.
- In the particular case of the swap with China, there is a extreme confidentiality, If it were to break, it could cause problems in trade relations between both countries, which is why the economic team maintains important reservations about what may happen.
- As this is a currency agreement between central banks, the power to provide information about the swap with China corresponds to the BCRA. Last September and after a request for access to public information made by TN, The BCRA admitted that to carry out the swap, “the People’s Bank of China carries out a very limited diffusion of the terms and conditions signed with each central bank and ensures their confidentiality.”
- This insistence on confidentiality has to do with “avoiding disclosures that could generate market disruptions, affecting the relationship between both central banks and threatening the continuity of the agreements.” In other words, the Government explained that the disclosure of the conditions of the swap with China can put at risk the continuity of the agreement.
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