In Argentina, US dollars are so scarce that yuan use is at record high

A dwindling US dollar supply is leading companies to embrace the yuan, highlighting Argentina’s dire financial state and China’s ambitions for its currency

The dollar’s supremacy in global trade is being chipped away by fragmentation, particularly in developing countries, caused by US-China rivalry

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In Argentina, the yuan represents a quick, short-term solution to keep assembly lines moving as long-term planning is challenged by surging inflation and zigzagging policy. Photo: AFP

Published: 9:33pm, 23 Jun 2023Updated: 11:10am, 26 Jun 2023

It has gotten so hard to find US dollars in Argentina that Whirlpool, the American appliance giant, is considering paying with China’s yuan to import parts for a new factory.

It is not alone.

Across the South American country, a dwindling US dollar supply is leading companies to embrace a currency that otherwise has played a peripheral role in international trade. The trend highlights both Argentina’s dire financial straits and China’s ambitions for the yuan.

“The central bank doesn’t have dollars so it needs the emergency aid China is offering,” said Marcelo Elizondo, a trade economist in Buenos Aires. “For Argentina, its currency ties to China represents an emergency, but for China it's a point of leverage to take advantage of a geopolitical opportunity.”

China recently allowed Argentina to use more than half of a US$18 billion currency swap line to support trade between them. Photo: Reuters

The dollar’s supremacy in global trade is being chipped away by fragmentation, particularly in developing countries, caused by the US-China rivalry. Russia’s economic isolation following its invasion of Ukraine has also opened up non-dollar trade routes to avoid sanctions.