According to a statement from the Central Bank of Argentina, the institution will gradually reduce the activated value of the swap over this period, with the aim of deactivating it completely by the end of the contract.
The authorities emphasised that the agreement – originally signed in 2020 and activated last year – is crucial for managing the balance of payments flows at a critical time.
China first signed a renminbi-based swap agreement with Argentina in 2009 and has since expanded the arrangements on at least three occasions.
When Beijing agreed to activate the swap in 2023, Argentina was facing a severe dollar shortage exacerbated by a devastating drought that severely affected soya plantations and caused exports to fall to their lowest level in 20 years.
The swap’s imminent expiry with no details on its renewal intensified market turbulence in recent weeks.
The tense relationship between Milei and the Chinese government left open the possibility that Beijing could delay the renewal and force Argentina to pay at least part of the US$5 billion.
Without the swap renewal, Buenos Aires would have to cover at least part of the amount, depleting the country’s already low foreign exchange reserves and hampering the Central Bank’s ability to receive new disbursements.
These fears interrupted the upwards trend of Argentine bonds, which had performed well since the beginning of the year, causing them to fall by more than 10 per cent between the end of May and the beginning of June, local newspaper Clarín reported.
“The extension until July 2026 of the activated portion of the currency swap will allow the Central Bank of Argentina to continue to reduce the risks it faces during the current economic transition, which began in December 2023, towards a consistent and sustainable monetary and exchange rate regime,” it said.
“In this way, cooperation between the two monetary institutions, which began in 2009, has been renewed and the financial and economic ties between the two countries were strengthened.”