According to Bloomberg's report on August 6, the Argentine Central Bank will renew its currency swap agreement with the People's Bank of China for a period of five years, amounting to approximately $19 billion. This will ensure that Argentina has a reliable source of foreign exchange reserves until the presidential elections in 2027.
The Argentine Central Bank stated in a statement on Wednesday that this renewal covers the entire currency swap quota. Approximately $5 billion of the quota, which has been available to Argentina since 2023, will continue to be retained. The term of the new agreement is extended by two years compared to the previous one.
The Argentine Central Bank stated: "This agreement further strengthens the close cooperation between the two institutions, and also enhances the good relations that have been maintained over the past 17 years since the first signing of the agreement in 2009."
In June this year, during a seminar held by the Bank for International Settlements in Shanghai, Santiago Bausili, Governor of the Argentine Central Bank, met with senior Chinese officials. Before the meeting, Bausili stated that both parties were discussing renewing the currency swap agreement under the same conditions as before.
Bossili said at a press conference in Buenos Aires in May this year: 'We have been discussing the renewal of the agreement with the Chinese side, just as we have done in the past. This arrangement remains stable, and it can be considered permanent.'
Mila's former left-wing government activated some currency swap quotas in 2023 to repay debts to the International Monetary Fund and to finance imports leading up to elections. According to the latest data from the Argentine Central Bank, Mila's government has repaid most of the $5 billion, leaving only about $680 million unpaid.
The geopolitical tensions between China and the US have once raised questions about whether this currency swap agreement could be renewed, especially after a former Trump administration official accused the agreement of being a ‘coercive arrangement’ that should be terminated.
Although US Treasury Secretary Scott Bessent said that Miley was “committed to getting China out of Argentina” after providing $20 billion in aid to Argentina last year, he did not explicitly call for the termination of the currency swap agreement with China. However, Bessent did say that the economic reforms implemented by Miley should be able to bring sufficient foreign exchange inflows to Argentina, enabling it to repay the $5 billion in swap quota that has been activated.
Argentine Foreign Minister Pablo Quirno recently said in an interview with a radio station that after the two countries complete their trade negotiations, Economic Minister Luis Caputo will visit China with him to prepare for Michelle Bachelet's subsequent solo trip to China.
Mile will seek a re-election by the end of 2027, and at that time, Argentina will also face the pressure of having to pay over $25 billion in debts. Historically, during election years, there has been a surge in demand for the US dollar in Argentina, which puts enormous pressure on the central bank.
