The new BRICS member Argentina paid the Chinese Yuan to settle an IMF payment and not the US dollar. Argentina has a shortage of the US dollar in reserves as the currency supply remains scarce in the country. Therefore, the Central Bank of Argentina resorted to paying a large sum to the payment to IMF in the Chinese Yuan and partly in the US dollar.
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BRICS member Argentina paid part of the $2.6 billion to the IMF in the Chinese Yuan and not the US dollar, reported Reuters. Argentina completed the October payment with IMF’s reserve assets, which is called the special-drawing rights (SDR). In addition, the day-to-day foreign exchange transactions in the Chinese Yuan also rose to 28% in Argentina.
BRICS: Chinese Yuan Gains As US Dollar Remains Scarce In Argentina
The development indicates that BRICS countries are taking the de-dollarization initiatives seriously. BRICS is putting forward the Chinese Yuan for trade and other forms of settlements instead of the US dollar. Read here to know how many sectors in the US will be affected if BRICS stops using the dollar for trade.
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Additionally, the country might increase its settlement in the Chinese Yuan in the coming weeks. Argentina has an interest payment due of $700 million to the IMF this month and the country might resort to depending on the Chinese Yuan again. The move puts the US dollar on the back foot as BRICS countries are strengthening their currencies through scarcity.
The Central Bank of Argentina confirmed that China cleared a currency swap line of $6.5 billion, equivalent to 18 billion Yuan. Also, multinational corporations in Argentina, including the US home appliance brand Whirlpool are using the Chinese Yuan for imports.
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The Argentinean government allowed Fortune 500 companies in the country to open new bank accounts to trade the Chinese Yuan.