Nigeria and the People’s Republic of China have sealed a $2.5 billion (Renminbi (RMB) 16 billion) currency swap deal. The agreement, which is purely an exchange of currencies, will make it easier for Chinese manufacturers seeking to buy raw materials from Nigeria to obtain enough Naira from banks in China to pay for their imports from Nigeria.
Indeed, the deal will protect Nigerian business people from the harsh effects of third currency fluctuations.
With the signing of the pact, Nigeria has emerged the third African country to have such an agreement with China.
In a statement by its spokesman, Isaac Okorafor, the Central Bank of Nigeria (CBN), which represented the country in the deal, yesterday announced the execution of the agreement.
According to the statement, CBN Governor, Godwin Emefiele, led officials of the apex Nigerian bank in brokering the deal while PBoC Governor, Dr. Yi Gang, led Chinese team at the official signing ceremony in Beijing, China, on April 27, 2018.
Okorafor said the feat was a culmination of over two years of painstaking negotiations by both central banks.
According to him, the transaction is aimed at providing adequate local currency liquidity to Nigerian and Chinese industrialists and other businesses, thereby reducing the difficulties encountered in the search for third currencies.
He said the agreement would provide Naira liquidity to Chinese businesses and provide RMB liquidity to Nigerian businesses, 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.