The question: Why is JP Morgan Chase doing this $10.2 billion swap.?
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The operation not only took financial operators by surprise. Also, Minister Carlos Fernandez only managed to say: "I am making no comments." When Redrado arrived at the plenary session of the assembly, a cloud of reporters followed. And by the afternoon he had to change his agenda for the requests for meetings from executives, like from Merrill Lynch, which were seeking more details about the announcement.
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Accord signed with China to strengthen reserves
Clarin
March 31, 2009
It will be an open credit in yuan to use at any time, equivalent to US$10.2 billion. Among other things, it could pay for Chinese imports and not use Central Bank money. That was pressure on the dollar is cut down.
By Silvia Naishtat
President Cristina Kirchner knew about it for a week. And a team of five members of the Central Bank is negotiating it since last February. But yesterday the news came to Medellin from Beijing. The Chinese Central Bank announced that by a swap of currencies it would open an account at the Argentine Central Bank for 70 billion yuan (Chinese currency) that currently quotes equal to US$10.2 billion. This is to say, Argentina is counting on an open credit in the fourth Central Bank of the world, which it could use or not, equal to 22% of its reserves.
This is the first operation of its kind between China and a Latin American country and while Martin Redrado, head of the BCRA, said here to bankers and investors that he has a great deal of reserves at his disposal to avoid any financial stress, the story is that now he counts on even more firepower, according to the view of economist Rogelio Frigerio, who is attending this meeting of the Interamerican Development Bank in this city in Colombia.
T
he operation, which gives Argentina the chance to access a multi-billion dollar loan from abroad, was compared yesterday to the special lines of credit that the U.S. Department of the Treasury opened for countries like Brazil, Mexico, Turkey and Singapore, for US$30 billion to each. The function is to avoid runs on currencies in the midst of the global crisis.
"Argentina is off that list, it's almost a pariah, but with this move it sends an important signal to the market in the midst of the uncertainty that is always generated from elections," said a well-known analyst from JP Morgan that asked for anonymity.
When one asked to speak with the president of the Central Bank of China, Zhou Xiaochuan, -who also was at the IDB meeting in Medellin one was told that he had already left for London for the meeting of the Group of 20. The spokespersons for the Chinese official recommended sticking to the concise official statement.
According to sources very close to Martin Redrado, these are the main points of the operation:
Argentina has a contingent loan, but that means access to a line of credit from abroad. The Central Bank, in a symmetrical move, opens an equivalent account for its Chinese partner in pesos.
The operation is for one year at a minimum and three years maximum. And Argentina therefore has an additional reserve at its disposal equal to US$10.2 billion.
If the country decides to turn to the loan it must advise the Chinese Central Bank 72 hours in advance. And at that time the amount, the interest rate and the term for the credit must be defined.
The advantage for Argentina is to have access to a lender of last resort.
For China, which already has given such loans in Asia, it means putting a foot in the region and beginning to position the yuan as a hard currency in the world. Looking ahead, China is seeking to replace the dollar in trade and that its products pay off in its own currency.
http://www.tradingmarkets.com/.site/news/Stock%20News/2257061/
already there 
