Argentina moves away from US dollar for trade in Chinese currency

Argentina on Wednesday stepped up its efforts to de-dollarise its crisis-ridden economy as Buenos Aires announced that it will begin paying for Chinese imports in yuan instead of dollars.

While the move is seen in context of country's immediate need to save its dwindling dollar reserves, the Argentines have long deemed the US dollar as the one that drives their counterparts across the country "crazy", according to an Al Jazeera report published in September 2019.

This is because the Argentines make crucial transactions such as the ones in real estate, with dollars.

In April, Argentina aims to pay around $1 billion of Chinese imports in yuan instead of dollars. Thereafter around $790 million of monthly imports will be paid in yuan, a government statement said.

Argentina's steps to decrease its dependence on US dollar

In November last year, Argentina expanded a currency swap with China by $5 billion, in an effort to increase its yuan reserves.

That agreement allowed Argentina "to work on the possibility" of advancing the rate of imports with yuan-denominated import orders being authorised in 90 days rather than the standard 180 days.

Immediate effects of the decision

The decision aims to ease the outflow of dollars, Argentina's Economy minister Sergio Massa said during an event following a meeting with the Chinese ambassador, Zou Xiaoli, as well as with companies from various sectors.

The decision comes as the South American nation battles critical levels in its dollar reserves amid a sharp drop in agricultural exports caused by a historic drought, as well as political uncertainty ahead of elections this year.

From tryst to wanted separation: Argentina's relationship with the US dollar

The US dollar is pretty much part of the human side of daily Argentinelifelines. It isoften used as punchline of jokes, the theme of memes, and even as part of characters' sarcastic undertone in locally-made films.

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In 1958, the then-President Arturo Frondizi implemented a so-called "Stabilisation Plan". This plan led to liberalisation of the market and included Argentina’s first agreement with the International Monetary Fund (IMF).

However, soon after market's liberalisation, the Buenos Aires' agreement with the IMF sent the Argentine currency peso into free fall.

The government announced a holiday for the Argentine exchange market for 12 days.

When the stock operations resumed in January 1959, the dollar became the currency that people began perceiving as currency of prosperity instead of their own peso.

The dollar became the lens through which people learned to evaluate what was happening around them, Al Jazeera reported in September 2019.

Analogies like "the price of beef loin is in the clouds – it costs as much as the dollar" helped glue this understanding. After that, families turned to the greenback to shield their savings.

That pattern persists to this day.

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