According to a report by Reuters, Argentina plans on buying the majority of its Chinese imports in yuan as opposed to dollars. The US government is doing so to prevent its diminishing supply of US dollars.
Per a Reuters report:
In April, it aims to pay around $1 billion of Chinese imports in yuan instead of dollars and thereafter around $790 million of monthly imports will be paid in yuan, a government statement said.
This decision had the goal of stemming the outflow of dollars, according to Argentina’s Economic Minister Sergio Massa who spoke about the issue during an event after a meeting with the Chinese ambassador, Zou Xiaoli, in addition to companies from various sectors.
“Following the worst drought in history, Argentina must keep its (foreign) reserves robust,” Massa declared, according to Anadolu Agency.
In November of 2022, Argentina extended a currency swap with China by $5 billion, with the aim of strengthening Argentina’s international reserves.
Per the Reuters report:
The agreement will allow Argentina “to work on the possibility” of advancing the rate of imports, Massa added, with yuan-denominated import orders being authorized in 90 days rather than the standard 180 days.
It’s anyone’s guess how the Argentine economy will fare due to its long-standing bouts of inflationary instability. One thing is certain: The US is likely falling down the Argentine path thanks to its embrace of big spending, heavy regulation, and loose monetary policies.
Third World dysfunction is coming to the US if its leaders are unwilling to restrain the government’s involvement in the economy and impose sound monetary standards. In the meantime, Latin American nations may get a strong dose of economic realism injected into them should they become more strongly affiliated with the more rational Eurasian powers.