Nigeria enters $2.5bn currency-swap deal with China

The Central Bank of Nigeria (CBN) on Thursday signed a bilateral currency swap deal with the Peoples Bank of China (PBoC) a statement by the CBN has revealed.

The statement, which was issued by the CBN spokesman, Isaac Okorafor, stated that Godwin Emefiele, the CBN governor, and Yi Gang, the PBoC governor, entered a three-year currency swap agreement on behalf of Nigeria and China respectively at the official signing ceremony in Beijing, China, on Friday.

The deal, which is valued at Renminbi (RMB) 16 billion or USD2.5bn, had taken two years of negotiation between Chinese and Nigerian governments. The agreement is expected to bring more flexibility into both markets by easing up the challenges encountered in the search for third currencies and “providing adequate local currency liquidity to Nigerian and China industrialists,’’ the statement read.

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The CBN spokesman added that the ‘’agreement will provide Naira liquidity to Chinese businesses and provide RMB liquidity to Nigeria businesses respectively, thereby improving the speed, convenience and volume of transactions between the two countries.

‘’It will also assist both countries in their foreign exchange reserves management, enhance financial stability and promote broader economic cooperation between the two countries.’’

According to Okorafor, Nigerian manufacturers, particularly Small and Medium Enterprises (SMEs), manufacturers and cottage industries, who import raw materials, spare-parts and simple machinery, will have access to the RMB liquidity from Nigerian banks without being exposed to the difficulties of seeking other scarce foreign currencies

 

 

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