Source: Bloomberg
It is difficult to find the US dollar in Argentina, so that the US home appliance giant Huiruzheng considers the use of RMB to pay the imported parts of the new factory.
This is not an isolated example.
In this South American country, the decreasing US dollar supply is prompting enterprises to accept a currency that plays marginal characters in international trade.This trend not only highlights the severe fiscal environment of Argentina, but also reflects China's ambition to RMB.
"The central bank does not have the US dollar, so it needs emergency assistance provided by China," said Marcelo Elizondo, a trading economist in Buenos Aires, said, "For Argentina, the relationship between currency with China is an emergency.But for China, it is a fulcrum for geopolitical opportunities. "
The dominant position of the dollar in global trade is being eaten by fragmentedization caused by competition between China and the United States, especially in developing countries.Because of the economic isolation after invading Ukraine, Russia also opened a non -US dollar trade route to avoid sanctions.
For example, neighbor Brazil also intends to use more RMB, which is a political decision made by President Lula to seek the US dollar alternative.
However, in Argentina, RMB represents a fast and short -term solution to maintain factories and wiring operations because long -term planning has been challenged by soaring inflation and chaotic policies.
China recently allowed Argentina to use more than half of the amount of currency swap (about S $ 24.3 billion) to support trade between the two countries.The two countries have signed a currency swap agreement since 2009, which is considered insurance to strengthen foreign exchange reserves during liquidity crisis.
"The rest of Argentina's remaining options is to use RMB from the exchange quota in China," said Maria Castiglioni, head of CT ASESORES consulting company.
According to data from Argentina customs agencies, more than 500 Argentine companies have required to use RMB to pay imported goods, including electronic product companies, automotive parts companies and textile manufacturers, as well as oil and mining companies.
Argentina's central bank data shows that officials have also approved the use of RMB to pay for imports equivalent to $ 2.9 billion.The total amount of RMB transactions in Argentina's foreign exchange market in the 10 days of June was about 285 million US dollars, which was twice that of May.
In addition, data from Mercado Abierto Electrónico, one of Argentina's largest exchanges, shows that RMB transactions have recently hit a record high of 28%in the Argentine foreign exchange market, which is the highest of 5%compared to the previous month.
Herri, a home appliance manufacturer headquartered in Michigan, is one of Argentina's current considering use of RMB instead of US dollars.The company invested $ 52 million in factories on the outskirts of Buenos Aires last year for the production of washing machines and other products.
Due to the shortage of production due to the shortage of US dollars and the shortage of shortage in recent months, the company is considering paying some imports with RMB to ensure the stable supply of key electronic components.
"We have been forced to shut down the factory at some point, which is not good for business, productivity and quality," said Juan Carlos Puente, president of Wheei Pradin America, said in an interview.He went on to say that the company plans to use 70%of its output in Argentina for export.
"We are studying how to use this new funding channel to continue importing raw materials," he said, and acknowledged that it was "not easy to change currency."
If Whirlpool promotes this plan, the company will join the ranks of Argentina, such as Mirgor and Newsan.According to data from Argentina customs agencies, the two companies paid imports from US $ 630 million from May to August with RMB.Other companies are waiting in line to wait for the RMB because the central bank forces the company to find its own US dollar financing overseas. After that, it has to wait for several months to use the local foreign exchange market.
Argentina's currency has depreciated by half in the past 12 months, and has performed the worst in the emerging market currency in the same period.The US dollar reserve of the Argentine Central Bank is at the lowest level since 2016. After eliminating the exchange quota, gold and multilateral financing, its liquid cash reserves are actually in a negative area.
A signs of pressure in Argentina's peso is that the government reported on Wednesday that the trade deficit in May reached 1.2 billion US dollars, which is the largest deficit since the outbreak of the currency crisis in 2018.
China has been promoting the RMB as an alternative currency of the US dollar, and has adopted other measures to expand its role in the global financial system, including gradually opening up the Chinese financial market and official withdrawal from conventional foreign exchange intervention.
Over the years, the People's Bank of China has signed a currency swap agreement with about 40 countries and steadily expand its new RMB cross -border payment system (CIPS).
When Argentina is anxious to pay for the RMB, government officials are negotiating with the International Monetary Fund (IMF), hoping to obtain more prepaid funds from the country's $ 44 billion aid plan.Argentina did not comply with any key targets of the IMF. Earlier, an unprecedented drought destroyed the export of crops worth about 20 billion US dollars and exacerbated the US dollar shortage.
