New Cfk Money Deal With China

[sergio]

Can someone explain exactly this new money deal with China. I assume China will demand its pound of flesh.

 

[ghost]

3 kilos

 

[wineguy999]

I have noticed HSBC branches going up like crazy. Sweetheart deal for the corporation tax-wise?

 

[Alicia karr]

From my take on translating from a Spanish article, basically China has agreed to give Argentina a lot of yuan which Argentina can then turn around and sell for dollars to bolster its desperately low dollar reserves. Implicit I'm sure, is Argentina selling its soul down a long road of trade agreements with China. But that's in the invisible ink.

 

[Rich One]

A currency swap is a swap, by which each party agrees to the currency of the other, giving in return an equivalent amount in your own currency. In this case, Argentina will have access, if considered necessary, to a maximum of 70.000 billion yuan in return giving to China the equivalent amount in pesos (up to approximately 37,000 million pesos).

Thus Argentina can pay for Chinese products in Yuan and vice- versa eliminating the need for US$

 

[ajoknoblauch]

A currency swap is a swap, by which each party agrees to the currency of the other, giving in return an equivalent amount in your own currency. In this case, Argentina will have access, if considered necessary, to a maximum of 70.000 billion yuan in return giving the equivalent amount in pesos (up to approximately 37,000 million pesos).

Thus Argentina can pay for Chinese products in Yuan and vice- versa eliminating the need for US$

So, how do we calculate the blue Yuan?

 

[Rich One]

So, how do we calculate the blue Yuan?

Well sure Kicillof knows

 

[Alicia karr]

Thanks for clarifying Rich. But can Argentina sell the yuan on the international market to get, "for example" dollars? Or was I wrong in assuming that was the motivation? Wish I knew as much Spanish and Econ as you!

 

[cbonanni]

I heard that China has come to the conclusion that Argentina is in default. All previous agreements may be subject to further review by China. That is why Kilicoff & friends have been in China last week.

China has manipulated the value of the Yuan for years.

 

[Rich One]

Thanks for clarifying Rich. But can Argentina sell the yuan on the international market to get, "for example" dollars? Or was I wrong in assuming that was the motivation? Wish I knew as much Spanish and Econ as you!

I have just quoted and translated a section of an article on the subject,, http://www.informere...p?noticia=17525

Your question is interesting maybe it can be done, however the belief is that the funds are to be used only to purchase Chinese goods without touching the available dollars. The swap is a credit line to be used when needed to pay for China exports.Doesn¡t mean China will tranfer 11 billion Yuan inmediately to Argentina.

Further Quote

"....This type of SWAP agreements are called contingent since it contemplates that the transactions, ie the provision of liquidity/Yuans in the currency of another country is really made only when necessary and adequate `. Thus, the monetary authority (Central Bank) has available Yuan liquidity, without it necessarily being used.

Moreover, neither party pays a fee or interest rate while the amounts in the currency of another country are not used.



Latest Exchange Rates: 1 United States Dollar = 6.1415 Chinese Yuan