China Ignores Miley’s Rhetoric, Gives Argentina a $35 Billion Lifeline

According to a statement from the Central Bank of Argentina, the institution will gradually reduce the activated value of the swap during this period, with the aim of fully deactivating it by the end of the contract.

Authorities said the agreement — originally signed in 2020 and activated last year — is essential for managing balance of payments flows at a critical time.

China first signed a renminbi-based swap deal with Argentina in 2009 and has since expanded the deals on at least three occasions.

When Beijing agreed to activate the swap in 2023, Argentina was facing a severe dollar shortage, exacerbated by a devastating drought that hit soybean plantations hard and sent exports to a 20-year low .

The looming expiration of the exchange without details on its renewal intensified market turbulence in recent weeks.

Strained relations between Milei and the Chinese government left open the possibility that Beijing could delay the renewal and force Argentina to pay at least part of the $5 billion.

Without the renewal of the swap, Buenos Aires would have to cover at least part of the amount, depleting the country’s already low foreign exchange reserves and hampering the Central Bank’s ability to receive new disbursements.

Those fears halted the uptrend in Argentine bonds, which had performed well since the start of the year, sending them down more than 10 percent between late May and early June, local newspaper Clarín reported.

“The extension until July 2026 of the activated part of the currency exchange will allow the Central Bank of Argentina to continue to reduce the risks it faces during the current economic transition, which began in December 2023, towards a stable and stable course monetary and exchange regularly”, it says.

“In this way, the cooperation between the two monetary institutions, which started in 2009, has been renewed and the financial and economic ties between the two countries have been strengthened.

Argentina’s Foreign Minister Dina Mondino briefly reacted to the news on social media platform X, announcing the renewal of exchanges and adding Chinese and Argentine flag emojis, as well as a handshake emoji.