© Reuters. FILE PHOTO: An informal currency trader holds U.S. Dollar bills on a street, in La Paz, Bolivia March 6, 2023. REUTERS/ Claudia Morales/File Photo

LA PAZ (Reuters) – Bolivia’s government is determined to curb dependence on the U.S. dollar for foreign trade, instead turning to the , officials said, as Latin American support for alternative currencies grows.

Economy Minister Marcelo Montenegro said the Andean country was following “a pattern at the level of international trade, that is generating a progressive increase in the use of the yuan in foreign trade,” during a press conference on Thursday in La Paz.

Bolivia has faced months of severe dollar shortages, driven in part by falling production, a key national export. Net foreign currency reserves have fallen to roughly $4 billion from a peak of $15 billion in 2014, pressuring state finances and threatening Bolivia’s long-defended currency peg with the dollar.

“China has become the world’s largest exporter. And in what currency would a large exporter want to receive everything it produces? Not in dollars, but in its own currency,” Montenegro said.

Through Bolivian state-owned bank, Banco Union, importers and exporters have been able to trade in yuan since February, and the Russian rouble since March, bank officials have said.

Financial transactions worth 278 million Chinese yuan ($38.7 million) accounted for 10% of Bolivia’s foreign trade in May through July, Montenegro said.

Russia’s ambassador to Bolivia, Mikhail Ledenev, has said that the transactions between Banco Union and Russia’s Gazprombank facilitate “the work of Russian companies in the market” despite economic sanctions imposed on Moscow by Western nations since 2022.

China and Russia are stepping up investments to develop Bolivia’s huge but largely untapped lithium resources to meet growing demand for the metal used to make electric vehicle batteries.

Three lithium deals with two Chinese and one Russian firm were signed earlier this year, pledging to invest a total of $2.8 billion, which could be made partly in yuan, Montenegro said.

The Chinese currency could also be used to pay off the government’s outstanding loans from Beijing and improve trade integration among Latin American countries, the minister added. Brazil and Argentina have also made it easier to trade in yuan.