The central banks of Argentina and China on Thursday activated a bilateral currency-swap agreement, with the South American country submitting a request for an initial tranche of yuan equivalent to $814 million.

The Central Bank of Argentina said in a statement that the People’s Bank of China authorized that first installment in keeping with an agreement signed in July by the two monetary authorities.

“This instrument will help stabilize bilateral trade balances. At the same time, this Central Bank has authorized an equivalent amount in pesos in favor of the People’s Bank of China,” the statement added.

The Central Bank of Argentina said the yuan “is on a path to becoming one of the major global reserve currencies.”

Yuan “can be freely converted into dollars, euros, or any other reserve currency” in Hong Kong, London or Singapore, the monetary authority noted.

As part of the three-year agreement, aimed at boosting the South American country’s dwindling foreign-currency reserves, Argentina’s central bank may request additional swaps up to a maximum of $11 billion, “which represent support for the implementation of its financial, exchange-rate and monetary policies.”

In 2009, Argentina and China signed a similar three-year agreement for currency swaps of up to $10.2 billion.

Date: October 30, 2014

Source: http://www.laht.com/article.asp?ArticleId=2358885&CategoryId=14093