Argentina's currency crisis is so dire that it's allowing people to open bank accounts using the Chinese yuan

• Argentina is allowing commercial banks to open deposit accounts in the Chinese yuan.

• The country is facing a drastic shortage in the US dollar, a major currency used in global trade.

• The Argentine peso has fallen nearly 80% against the greenback since the start of 2020.

Argentina is facing such a dire shortage of US dollars that it is now allowing commercial banks to open deposit accounts in the Chinese yuan.

The Central Bank of Argentina said in a Thursday statement on its website that it is allowing the Chinese yuan as a form of currency in savings and checking accounts.

The move complements the country's securities regulator announcing that Argentina can issue securities in the Chinese currency, the central bank added.

Argentina — which already allows bank accounts to be opened using US dollar deposits — has been boosting its use of the yuan following a drastic shortage of the greenback.

In April, the country started to pay for imports from China in the yuan. More recently, Argentina partly made a $2.7 billion payment to the International Monetary Fund using the yuan, the Buenos Aires Times reported, citing sources from the country's economy ministry on Thursday.

Argentina turned to the yuan as an alternative currency because its central bank dollar reserves are at their lowest level since 2016 — due in part to an ongoing drought that hit the country's agriculture exports, according to a June 23 Bloomberg report.

The drought meant that Argentina sold fewer crops, sales of which are denominated globally in the US dollar. This, in turn, led to a dollar crunch. It also means it's harder for the country to trade internationally because commodities are generally denominated in the dollar.

On top of that, the Argentine peso has crashed against the dollar, falling 30% this year — making it far more expensive for the country to buy any greenback. The peso has lost nearly 80% of its value against the greenback since the beginning of 2020.

All these developments have opened a window of opportunity for the yuan, which Beijing has been trying to internationalize.

China has been trying to increase the global circulation of the yuan, using the currency for almost all of the Russian oil it bought over the past year, Reuters reported in May, citing multiple trading executives with direct knowledge of the matter.

In Argentina, yuan transactions in the country's currency market came up to about $285 million in the first 10 days of June alone — double the volume in the entire month of May as over 500 companies look into paying for imports in the Chinese currency, Bloomberg reported on June 23.

Despite the surge in yuan usage, one key Argentinian politician is refusing to move away from the dollar. Javier Milei, a leading presidential candidate, has proposed replacing the peso with the greenback as Argentina's local currency to tame inflation.

"The peso melts like ice in the Sahara Desert," Milei is known to say, according to Bloomberg.

The Argentine central bank did not immediately respond to a request for comment from Insider sent outside regular business hours.

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