Argentina Abandons USDollar In China Trade As Local Bitcoin Reaches Record High

Tyler Durden's Photo
by Tyler Durden
Thursday, Apr 27, 2023 - 09:20 PM

Over the last few weeks, it has seemed you can't turn a page, blink at a pixel, or hear a news report without some form of de-dollarization headline shrieking at you. From Brazil to Saudi Arabia, and from India to Argentina, and increasing number of nations are 'reportedly' shifting away from the dollar hegemon.

Some recent headlines:

And today it escalated further as Reuters reports that Argentina will start buying the bulk of its Chinese imports in yuan instead of dollars, as it seeks to preserve its shrinking supply of USDollars.

In April, it aims to pay around $1 billion of Chinese imports in yuan instead of dollars and thereafter around $790 million of monthly imports will be paid in yuan, a government statement said.

The decision aims to ease the outflow of dollars, Argentina's Economy minister Sergio Massa said during an event following a meeting with the Chinese ambassador, Zou Xiaoli, as well as with companies from various sectors.

"Following the worst drought in history, Argentina must keep its (foreign) reserves robust," Sergio Massa said, per Anadolu Agency.

In November last year, Argentina expanded a currency swap with China by $5 billion, seeking to strengthen Argentina's international reserves.

The agreement will allow Argentina "to work on the possibility" of advancing the rate of imports, Massa added, with yuan-denominated import orders being authorized in 90 days rather than the standard 180 days.

On a side note, as Argentina' official peso rate has crashed 99% against the dollar since the start of its rolling crisis in 2018, the price of Bitcoin just hit a record high in the South American nation...

At the same time, as CoinTelegraph reports, Bitcoin and similar cryptocurrencies operating outside governments’ and central banks’ purview are increasingly emerging as alternatives. For example, data shows that Bitcoin’s peer-to-peer weekly volume in Argentina reached a record high of nearly $30 million in March on the Paxful exchange.

Bitcoin weekly volume in Argentina. Source: Paxful/CoinDance

Earlier in April, the National Commission of Value (CNV), Argentina’s securities regulator, approved a Bitcoin-based futures index on the Matba Rofex exchange set to debut in May.

The derivative, settled in pesos, will enable accredited investors to gain exposure to the Bitcoin markets.

Finally, and ironically, Argentina’s parallel exchange rate, known as the blue-chip swap, jumped after Argentina’s Economy Ministry said the central bank is preparing to dramatically hike its benchmark interest rate by 1,000 basis points Thursday as a renewed peso selloff in parallel markets piles more pressure on the country’s economic crisis.

The rate strengthened 2.2% to about 460 pesos per dollar, on pace for the biggest one-day gain since mid-January.

Nevertheless, de-dollarization continues to accelerate globally.

As we detailed recently, the greenback’s share in global reserves slid last year at 10 times the average speed of the past two decades as a number of countries looked for alternatives after Russia’s invasion of Ukraine triggered sanctions.

As Stephen Jen and Joana Freire argue that “The prevailing view of ‘nothing-to-see-here’ on the US dollar as a reserve currency seems too innocuous and complacent."

“What needs to be appreciated by investors is that, while the Global South is unable to totally avoid using the dollar, much of it has already become unwilling to do so.”

Still think it won't or can't happen, here's George Soros... from 2009...