The Central banks of China and Argentina recently renewed their bilateral currency swap agreement with a size of 130 billion yuan/4.5 trillion Argentine pesos ($18.2 billion). The agreement is valid for three years, the People's Bank of China (PBC), China's central bank, said on Friday.

"Argentina is currently facing a severe shortage of foreign exchange reserves in US dollars, and it has an inflation rate of over 100 percent. The renewal of the currency swap agreement between China and Argentina will help support the troubled Argentine peso and ease its economic difficulties, while further deepening the economic and trade cooperation between the two countries," Zhou Zhiwei, an expert on Latin American studies at the Chinese Academy of Social Sciences.

Analysts also said that the move can further pave the way for closer trade ties.

On June 2, Yi Gang, governor of the People's Bank of China, met with Argentine Economy Minister Sergio Massa and Central Bank Governor Miguel Pesce. They exchanged views on the economic and financial situation, and on how to promote financial cooperation and other topics, according to a statement posted on the PBC's website.

Also on June 2, China and Argentina signed a cooperation plan in Beijing to jointly promote the construction of the Belt and Road Initiative, a move that analysts say will further deepen bilateral economic and trade cooperation.

China's top economic planner said that the two sides will deepen cooperation in the fields of infrastructure, energy, economy and trade, finance, and people-to-people and cultural exchanges.

In January this year, China and Argentina expanded the currency swap deal. Meanwhile, governors of the central banks committed to deepening the use of the yuan in the Argentine market.

The first currency swap between China and Argentina was signed in 2009 and was worth 70 billion yuan, which was valid for three years.

In July 2017, China's central bank renewed the swap agreement with the Central Bank of Argentina. The agreement allowed the two central banks to swap 70 billion yuan for 175 billion Argentine pesos. A supplementary swap deal for 60 billion yuan was signed in December 2018, in addition to the agreement signed in July 2017.

China is accelerating the settlement of local currency trade with other Latin American countries, reflecting the efforts of both sides to maintain economic and trade stability and reduce the impact of volatility in international financial markets, Zhou said.

"This will also further promote the process of yuan internationalization, while providing developing countries with more currency options and a huge boost to the reform of the global monetary system," Zhou noted.