It’s gotten so hard to find US dollars in Argentina that Whirlpool Corp., the American appliance giant, is considering paying with China’s yuan to import parts for a new factory.

It’s not alone.

Across the South American country, a dwindling greenback supply is leading companies to embrace a currency that otherwise has played a peripheral role in international trade. The trend highlights both Argentina’s dire financial straits and China’s ambitions for the yuan.

“The central bank doesn’t have dollars so it needs the emergency aid China is offering,” said Marcelo Elizondo, a trade economist in Buenos Aires. “For Argentina, its currency ties to China represents an emergency, but for China its a point of leverage to take advantage of a geopolitical opportunity.”

The dollar’s supremacy in global trade is being chipped away by fragmentation, particularly in developing countries, caused by the US-China rivalry. Russia’s economic isolation following its invasion of Ukraine has also opened up non-dollar trade routes to avoid sanctions.

Neighboring Brazil, for instance, intends to use more yuan, too, a political decision by President Luiz Inacio Lula da Silva to seek alternatives to the dollar.

In Argentina, however, the yuan represents a quick, short-term solution to keep assembly lines moving as long-term planning is challenged by surging inflation and zigzagging policy.

China recently allowed Argentina to use more than half of a $18 billion currency swap line to support trade between them. The two nations have shared a bilateral swap agreement since 2009, which was conceived as a sort of an insurance policy to strengthen foreign reserves during liquidity crises.

“The only option it has left is to access the yuan from the China swap line,” said Maria Castiglioni, director of consulting firm C&T Asesores in Buenos Aires.

More than 500 Argentine companies have requested to pay for imports in yuan, including electronics, auto parts and textile makers, as well as oil and mining firms, according to the country’s customs agency.

Officials have also authorized import payments in the Chinese currency equivalent to $2.9 billion, according to the central bank. In first 10 days of June, yuan transactions in Argentina’s currency market totaled about $285 million, double for all of May.

As well, the share of yuan transactions in Argentina’s foreign currency market recently hit a daily record of 28%, compared with as high as 5% last month, according to data from Mercado Abierto Electrónico, one of the country’s biggest exchanges.

Whirlpool, the Michigan-based home appliance-maker, is among companies in Argentina now looking at using the yuan instead of dollars. The company invested $52 million in its factory outside Buenos Aires last year to make washing machines and other products.

Now struggling for imports amid the dollar squeeze and after shortages paused production briefly in recent months, the company is considering paying for some inputs in yuan to ensure a steady supply of key electronic parts.

“We’ve had to stop the factory at some points and that’s not good for business, productivity nor quality,” Juan Carlos Puente, president of Whirlpool Latin America, said in an interview, adding that the company plans to export about 70% of its production in Argentina.

“We’re working to see how we can leverage this new avenue of flows to be able to continue importing materials,” he said, acknowledging that changing currencies “isn’t easy.”

If it moves ahead with the plan, Whirlpool would join the ranks of Argentine companies like Mirgor and Newsan, which paid for imports worth $630 million between May to August using yuan, according to Argentina’s customs agency. Other companies are lining up for yuan as the central bank forces firms to find their own dollar financing abroad before waiting months to tap the local FX market.

Argentina’s currency has lost half its value over the past 12 months, the worst performance in emerging markets over that period. The central bank’s dollar reserves are at their lowest level since 2016, and when stripping out the swap line, gold and multilateral financing, its liquid cash reserves are actually in negative territory.

As a sign of pressure on the peso, the government on Wednesday reported that its trade deficit in May reached $1.2 billion, its largest figure in the red since 2018 when a currency crisis erupted.

China has been promoting the yuan as an alternative to the dollar among other steps to broaden its role in the global financial system, including the gradual opening up of Chinese financial markets and authorities’ exit from regular currency intervention.

The People’s Bank of China has signed currency swap agreements with some 40 countries over the years, and steadily expanded its fledgling homegrown network of cross-border yuan payments system, known as the CIPS.

Argentina’s rush to pay the bills in yuan comes as government officials negotiate with the International Monetary Fund for more up-front cash from the country’s $44 billion aid program. Argentina isn’t complying with any of the key IMF targets after a record drought destroyed an estimated $20 billion worth of crop exports, exacerbating the dollar shortage.

--With assistance from Yujing Liu.