Eventually the Central Bank of Nigeria (CBN) has signed the currency swap deal after two years of deliberations and negotiations with with the Chinese government
The importance of this is that since almost 70% of the goods we import come from China and Asia and 12% America why must we use Dollars to transact with China? from now instead of using dollars at N500 to 1dollar to import those goods, we can now buy Yuan at 47 naira to 1 Yuan and import those stuffs directly.
Instead of buying these goods in dollars in China, we will now buy them in Yuan which is 5times cheaper than dollars.
The swap deal is an agreement with a three (3) year tenor which allows both the CBN and PBoC to swap a maximum amount of Fifteen Billion Renminbi/Chinese Yuan (CNY 15 Billion) for Seven Hundred and Twenty Billion Naira (NGN 720 Billion). This amount is equivalent to US$2.5 Billion using an exchange rate of NGN305: 1US$.
As provided in the Regulations, the Currency Swap Agreement was purposely executed to:
finance trade and investment between China and Nigeria;
maintain financial market stability; and
facilitate other connected purposes as may be agreed upon by both countries.
Essentially, the Currency Swap Agreement seeks to create a platform that provides Naira liquidity to Chinese firms and investors looking to do business with Nigeria on the one hand; and also provides Chinese Yuan liquidity to Nigerian firms and investors looking to do business with China on the other hand. The Currency Swap Agreement is designed to aid trade transactions between China and Nigeria and remove the need to first source for the “greenback” (US Dollars) before payments for transactions involving the two countries can be made.
Lolo Ijeoma Njoku reporting, Obinwannem News /September 5, 2021