The following report is by Insider:
The Central Bank of Argentina said in a Thursday statement on its website that it is allowing the Chinese yuan as a form of currency in savings and checking accounts.
The move complements the country’s securities regulator announcing that Argentina can issue securities in the Chinese currency, the central bank added.
Argentina — which already allows bank accounts to be opened using US dollar deposits — has been boosting its use of the yuan following a drastic shortage of the greenback.
In April, the country started to pay for imports from China in the yuan. More recently, Argentina partly made a $2.7 billion payment to the International Monetary Fund using the yuan, the Buenos Aires Times reported, citing sources from the country’s economy ministry on Thursday.
Argentina turned to the yuan as an alternative currency because its central bank dollar reserves are at their lowest level since 2016 — due in part to an ongoing drought that hit the country’s agriculture exports, according to a June 23 Bloomberg report.
The drought meant that Argentina sold fewer crops, sales of which are denominated globally in the US dollar. This, in turn, led to a dollar crunch. It also means it’s harder for the country to trade internationally because commodities are generally denominated in the dollar.
On top of that, the Argentine peso has crashed against the dollar, falling 30% this year — making it far more expensive for the country to buy any greenback. The peso has lost nearly 80% of its value against the greenback since the beginning of 2020.
All these developments have opened a window of opportunity for the yuan, which Beijing has been trying to internationalize.
China has been trying to increase the global circulation of the yuan, using the currency for almost all of the Russian oil it bought over the past year, Reuters reported in May, citing multiple trading executives with direct knowledge of the matter.
In Argentina, yuan transactions in the country’s currency market came up to about $285 million in the first 10 days of June alone — double the volume in the entire month of May as over 500 companies look into paying for imports in the Chinese currency, Bloomberg reported on June 23.
Despite the surge in yuan usage, one key Argentinian politician is refusing to move away from the dollar. Javier Milei, a leading presidential candidate, has proposed replacing the peso with the greenback as Argentina’s local currency to tame inflation.
The peso melts like ice in the Sahara Desert.
Milei is known to say, according to Bloomberg.
The Argentine central bank did not immediately respond to a request for comment from Insider sent outside regular business hours.
AUTHOR COMMENTARY
It should be noted that while the dollar is rapidly losing its purchasing power, it still remains the least sickest puppy in the kennel due to it’s reserve currency status, thus why it’s relative strength is still high and many nations are still considering switching to the dollar – at a time when many other nations are accelerating their ploys to dump the dollar.
Meanwhile the Chinese yuan continues to look good for many others looking to switch; though China is also trending quite downward, due to three years of “Zero Covid” policies that destroyed their financial sectors.
Nevertheless, we continue to watch the rapid acceleration of the U.S dollar in decline, and when it does finally lose its reserve status within the next few years, the desolation it will cause in America will be immense.
He that oppresseth the poor to increase his riches, and he that giveth to the rich, shall surely come to want.
Proverbs 22:16
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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