Argentina is in talks with China about extending a currency swap program due to recent financial turmoil, the country’s cabinet chief said, Reuters reports.
“There are talks ... to see if there’s a possibility of extending the swaps in the current situation,” Cabinet Chief Marcos Pena said via webcast from an event he attended in New York.
He said Argentina’s relationship with China has been “very fruitful.” China’s central bank last year extended a bilateral swap agreement for 70 billion yuan ($10.37 billion) for another three years.
Argentina’s former President Cristina Fernandez first inked a swap agreement with China in 2009 as a means of boosting dwindling reserves her government relied on to pay for energy imports and cover debt obligations.
A second agreement was signed in 2014. The previous swaps allowed Argentina to bolster foreign reserves or pay for Chinese imports with the yuan currency.
Reserves have risen to nearly $50 billion from $24.9 billion on Dec. 10, 2015, when President Mauricio Macri took office promising to end Argentina’s financial isolation with a plethora of free-market reforms. Still, the central bank sold $10 billion of reserves so far this year trying to stem a weakening peso currency.
Investors grew sour on Argentina in late April when higher U.S. interest rates abroad caused an exodus from emerging markets. Argentina is negotiating a credit line with the International Monetary Fund to guarantee funding through 2019.
Pena also said the finance ministry and central bank were working to reduce volatility from one-month Lebac securities.
The central bank last month offered to swap Lebacs for paper of longer duration. The popular, high yielding securities have obliged the bank to take a hard once-a-month blow to its reserves.
“We understand that that is a situation that has some vulnerability that should be reduced,” Pena said.