Argentina receives second currency swap from China

Argentina receives second currency swap from China

Reuters

BUENOS AIRES – Argentina’s central bank on Monday, 17 November 2014 received the second installment of a currency swap from China worth $500 million at a time when the South American country is battling to shore up its ailing foreign reserves.

In default on its debt and cut off from global capital markets, Argentina has now received a total $1.3 billion from the Asian economic powerhouse in currency swaps in the past three weeks.

The central bank issued a statement showing its reserves at $28.785 billion – below five months import cover – on Monday from $28.279 billion on Friday.

The swaps are part of a loan worth a total $11 billion signed by Argentina’s President Cristina Fernandez and her Chinese counterpart in July, shortly before her government defaulted on some of its debt for a second time in 12 years. Under terms of the loan agreement, Argentina can either use the funds to bolster its reserves or pay for Chinese imports with the yuan currency.

Falling export revenues have forced leftist Fernandez to tighten restrictions on imports to safeguard reserves, which in turn has stunted industrial output, analysts say.

Argentina relies on its reserves to pay energy imports worth approximately $7 billion a year and to pay its debt obligations.