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RMB becomes more frequently used in Latin America

Xinhua | Updated: 2016-12-31 10:59

BUENOS AIRES - A tango show in Argentina, a caipirinha in Brazil, a delicious ceviche in Peru, or a weekend beach break in Mexico. All these pleasures may soon be paid for with a wad of crisp 100 renminbi (RMB) bills.

This is a consequence of the growing presence of the Chinese currency in Latin America thanks to the region's deepening financial cooperation with China and the internationalization of the RMB.

On Oct 1, the RMB was added to the International Monetary Fund (IMF)'s Special Drawing Rights basket, a supplement to a shortfall of preferred foreign exchange reserve assets, namely gold and the US dollar.

This has brought the Chinese currency to a new level of international fame, and it is now not unusual to see shopkeepers in Buenos Aires' antiques markets accept RMB from Chinese tourists.

The 100-RMB notes are already frequently used in commercial exchanges in Argentina, Brazil, Chile and Suriname, countries with which China has currency exchange agreements.

The growing cooperation also allows China's UnionPay bank cards to be used in 12 Latin American countries, including Mexico, Brazil, Argentina and Peru.

Beyond having the UnionPay logo added to signs that traditionally welcomed only Visa, MasterCard and American Express, the Chinese rival is also seeking to launch UnionPay cards in local markets.

Speaking to Xinhua, Argentinean international relations expert Jorge Castro said the IMF's decision is positively impacting Argentina.

For Castro, who leads the Institute for Strategic Planning, "the use of the RMB as a global currency will accelerate the promotion of Argentinean agricultural exports. Furthermore, the currency will play a larger role in Chinese financing in Argentina."

Juan Pablo Scasserra, director of foreign trade for HSBC Argentina, said earlier this year that "operating in RMB allows Argentinean exporters and importers to negotiate better conditions with their Chinese counterparts, among other benefits."

"Argentina and China have reached a new political level in their relationship, which makes them strategic and integral partners," Gustavo Girado, director of Asia & Argentina consultancy, told Xinhua, adding that the RMB joining the IMF's elite currency club can bring about more opportunities for both countries.

According to Inter-American Development Bank Vice President Alexandre Meira da Rosa, the bank also sees the internationalization of the RMB in Latin America as a positive step, which can make trade easier and open up alternative lines of financing.

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