Yesterday, Argentina’s Central Bank paid US$4.741 billion to holders of the matured Boden 15 bond. The Central Bank suffered its biggest loss since 2006, with reserves falling to US$27.713 billion. Of the total payment, roughly US$4 billion, or nearly the entire amount, left the country to pay foreign bondholders.
Central Bank President Alejandro Vanoli flew to Lima on Monday night to attend a meeting for Central Bank presidents, where he is confirmed to be meeting with representatives of the People’s Bank of China. The subject of those meetings? To increase the currency swap line from China.
In less than a year, Argentina has all but exhausted the roughly US$11 billion dollar-equivalent swap line with China. This foreign currency credit now makes up approximately 25 percent of Argentina’s reserves, and the government is looking to increase this amount even though Chinese Yuan can only be used to import goods from China — not to pay dollar-denominated debt or import from other countries.
The Embassy of China confirmed to Cronista that talks to increase the US$11 billion dollar equivalent limit were underway.