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China activates $6.5 billion swap line with Argentina

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© FILE PHOTO: A one hundred Argentine peso bill sits on top of several one hundred U.S. dollar bills in this illustration picture taken October 17, 2022. REUTERS/Agustin Marcarian/Illustration/File Photo

BUENOS AIRES () -Argentina’s central bank said on Wednesday that China has cleared a currency swap line totaling a freely accessible $6.5 billion, part of a broader deal the South American country has been using to help it defend the embattled local peso.

The agreement with China has helped Argentina increase its depleted foreign currency reserves as it undergoes a major economic crisis, with annual inflation above 130% and central bank dollar reserves hitting negative levels.

The Wednesday move in practice increases the amount Argentina can access as part of the swap line formalized in early 2023.

“China has increased the amount and instead of $5 billion we are getting $6.5 billion,” Argentine President Alberto Fernandez told Radio 10 from the Asian country, where he is for an official trip.

“Every time we went through difficult times, Xi Jinping’s government gave us its support,” Fernandez added. “This is an important step so that production (in Argentina) does not stop.”

This is the second swap line with China activated during Fernandez’s presidency. According to an official bank source, the total amount of the swap line stood at 47 billion yuans.

The move comes as Argentines head to the ballots on Sunday for a presidential election. Libertarian Javier Milei, who has vowed to dollarize the economy and shut down the central bank, is seen as the front-runner.

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