Argentina expands China currency swap as Beijing eyes Latin America

China has used currency deals, financing for infrastructure projects and other investments to expand its influence in Argentina and across Latin America. (File/AP)
Updated 09 November 2018
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Argentina expands China currency swap as Beijing eyes Latin America

  • The agreement is practically done, minus some formal details to finalize the process: Central Bank President Guido Sandleris
  • Argentina and China first agreed to a currency swap program to boost its dwindling reserves in 2009

Argentina’s central bank said on Thursday it would nearly double its currency swap deal with China, bringing the total to 130 billion yuan ($18.7 billion), as Beijing looks to expand its influence in the recession-struck Latin American country.
Central Bank President Guido Sandleris, who was in China finalizing the agreement, said that the deal for 70 billion yuan would be expanded by 60 billion yuan, according to a bank spokesman.
“The agreement is practically done, minus some formal details to finalize the process,” Sandleris said.
Argentina and China first agreed to a currency swap program to boost its dwindling reserves in 2009 under former President Cristina Fernandez. Last year, under President Mauricio Macri, they agreed to extend the program for three more years.
China has used currency deals, financing for infrastructure projects and other investments to expand its influence in Argentina and across Latin America.
“As the US is looking inward, China is continuing to invest in the region. Between currency swaps and tech investments, China is filling the gap in Latin America,” said Nathan Lustig, managing partner at Magma Partners, a Chilean-based startup investment firm.
The swap agreement comes ahead of the high-profile G20 summit of the world’s major economies to be held in Buenos Aires at the end of November, which Argentina will host.
Argentina’s central bank has approximately $54.25 billion in reserves, after the country firmed up a financing agreement with the International Monetary Fund last month.
Argentina turned to external sources of financing after a bad drought and a run on the peso currency earlier this year sparked investor jitters over whether the country could service its international debts in 2019.
Sandleris assumed the role of central bank president in September after his predecessor unexpectedly resigned amid negotiations to expand the IMF agreement to $56.3 billion, the largest in the fund’s history.
Under Sandleris, the peso has stabilized after the central bank initiated a policy to limit growth in the country’s monetary base. The policy aims to control inflation as the country struggles to pull itself out of recession.
“During the first month of our new monetary policy, we met the goal of zero growth in the monetary base, and we will continue to meet that goal in the coming months,” Sandleris said.
Sandleris added that the impact of the policy on inflation would not be immediate.
Argentina’s inflation in 2018 is forecast at 47.5 percent, according to the latest central bank poll.
The peso has lost almost half of its value against the dollar so far this year.


Iran says Japan has started process of importing Iranian oil

Updated 23 min 26 sec ago
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Iran says Japan has started process of importing Iranian oil

  • Exemptions have been granted to Iran's biggest oil clients - Japan, China, India, South Korea, Taiwan, Italy, Greece and Turkey
  • Iranian oil accounted for 5.3 percent of Japan's total crude imports in 2018

LONDON: Japan has started the process of importing Iranian oil, which was suspended due to U.S. sanctions, the governor of Iran's central bank said on Monday.
The resumption of oil imports comes after Tokyo was granted a waiver from U.S. sanctions that went into effect in November. Iran is the fourth-largest oil producer among the members of the Organization of the Petroleum Exporting Countries.
"After China, South Korea, India and Turkey, Japan also started the process of importing Iranian oil," Abdolnaser Hemmati was quoted as saying by the state news agency IRNA.
Iran's oil exports have fallen sharply since U.S. President Donald Trump said in May 2018 the United States would withdraw from a pact curtailing Iran's disputed nuclear programme and reimpose sanctions on Tehran.
However, exemptions have been granted to Iran's biggest oil clients - Japan, China, India, South Korea, Taiwan, Italy, Greece and Turkey - which allow them to import some oil for another 180 days.
Iranian oil accounted for 5.3 percent of Japan's total crude imports in 2018.