BUENOS AIRES, Oct 19 (Reuters) - A multibillion-dollar currency swap between Argentina and China will launch in November, bolstering the South American country's diminished foreign reserves, the central bank chief was quoted as saying in a local paper on Sunday.
The swap will permit Argentina to either pay for Chinese imports with the yuan currency or reinforce its hard currency reserves, which have fallen by more than 30 percent this year.
It is part of a loan worth a total $11 billion signed by Argentina's President Cristina Fernandez and her Chinese counterpart in July, shortly before the Latin American nation defaulted on its debt for the second time in 12 years.
"The swap with the People's Bank of China ... we estimate that it will become operative in November," local newspaper Pagina/12 reported Alejandro Vanoli said in an interview.
The newspaper, which has close ties with the Fernandez government, did not report additional details on the exchange.
No government or central bank officials were immediately available for comment.
Sources have previously told Reuters that Argentina will receive an initial installment of Chinese yuan worth about $700-$800 million before year's end.
Argentina has relied on its reserves to pay for government expenses and has struggled to replenish them without access to global capital markets since its default.
"Reserves are for being used," Vanoli told Pagina/12. "The government is not afraid, in a situation as special as this one is, to pay off its debt with reserves."
Vanoli took over as the head of the central bank earlier this month after his predecessor quit in a dispute with the government.
Vanoli told Pagina/12 that he expects Argentina to end the year with a stock of reserves close to the current level.
Argentina's international reserves now stand at $27.3 billion, according to central bank figures updated on Friday.
The economy ministry said on Friday that it plans to launch a new two-year sovereign bond for up to $1 billion this month.
Vanoli also said in the interview that Argentina's dispute with the holdout owners of its defaulted debt will not likely be easily solved upon the expiration of a bond clause at the end of the year.
Argentina contends the so-called Rights Under First Offer, or RUFO, clause prohibits it from offering better terms to creditors who refused to take part in past debt restructurings.
"With respect to the RUFO clause ... this idea has emerged that on January 2 everything will be fixed. And the answer is that on January 2 nothing is going to happen," Vanoli was quoted saying in Pagina/12.
Vanoli said the hedge funds that have sued Argentina for full payment on its defaulted bonds must be more flexible with their demands. (Reporting by Maximiliano Rizzi; Writing by Mitra Taj; Editing by Eric Walsh)