CURRENCY SWAP DEAL: CBN issues guidelines for transactions in Renminbi

In furtherance to the recent bilateral currency swap deal signed by the Central Bank of Nigeria (CBN) with the People’s Bank of China (PBoC), the CBN has issued regulations for transactions with authorised dealers in Renminbi.

It would be recalled that the CBN and the PBoC entered a three-year currency swap agreement, which is for a maximum amount of 15 billion Chinese Yuan for 720 billion Nigerian Naira, on behalf of Nigeria and China respectively

The agreement was expected to bring more flexibility into both markets by easing the challenges encountered in the search for third currencies and providing adequate local currency liquidity to Nigerian and Chinese industrialists.

The apex bank in a document released on Thursday by the bank’s Director, Financial Markets Department, Dr. Alvan E. Ikoku, on its website and titled “Regulations for Transactions with Authorised Dealers in Renminbi,” said it may conduct bi-weekly trading sessions to make liquidity available for trade and direct investment between both countries.

The guidelines stipulated that deposit money banks and merchant banks which have been authorised as dealers should open Renminbi bank accounts and make the accounts details available to the CBN.

“All Authorised Dealers shall open Renminbi accounts with a corresponding bank and advise CBN with its Renminbi Account details which may either be with a bank onshore or offshore China.

Read also: Nigerian govt moves to reduce tax burden

“Importers intending to import from China shall obtain Proforma invoice denominated in Renminbi as part of the documents required for the registration of Form M.

“FX purchase in the window shall not be used for payments on transactions in which the beneficiaries are not in China.

“Authorised Dealers shall not open domiciliary accounts denominated in Renminbi for customers,” the document read.

The CBN stated that the deal would not stop applicable levies paid on imports and exports, stressing that unused funds by authorised dealers lasting more than 72 hours should be returned to the CBN for repurchase at the bank’s buying rate.

It added that authorised dealers may not earn more than 50 kobo in a customer’s bid.

The regulator had appointed First Bank of Nigeria Plc, Stanbic IBTC Bank Plc, Standard Chartered Bank Ltd. (SCM) and Zenith Bank Plc. as settlement banks to provide trade obligations for easy exchange of Nigerian Naira and Chinese Renminbi Yuan to importers and exporters from the two countries.

While Stanbic IBTC Bank Plc. and Standard Chartered Bank Ltd. with existing operation in China were expected to start the settlement process immediately, First Bank of Nigera Plc. and Zenith Bank Plc. would be required to upgrade their representative offices to full operations in China.
By Oluwasegun Olakoyenikan…

 

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