Currency Swap Deal: Hope For Nigerian/Chinese Businesses

'Dotun Akintomide
Writer
new-diplomat default image
new-diplomat default image

Ad

DHQ Never Mentioned Any Coup Attempt

1. The attention of the Defence Headquarters (DHQ) has been drawn to a false and misleading report by an online publication insinuating that the cancellation of activities marking Nigeria’s 65th Independence Anniversary was linked to an alleged attempted military coup. The report also made spurious references to the recent DHQ press release announcing the arrest…

Oil Prices Dip as Trump-Putin Summit Looms

Crude oil prices are expected to decline this week due to the hypothetical possibility of a peace agreement between the US and Russia, which could lead to a rebound in Russian oil exports and contribute to a predicted supply glut. The International Energy Agency has revised its demand growth estimates downwards for both this year…

When Forgiveness Is Hard (2), By Funke Egbemode

She was popularly called Mama Iyabo. Her husband threw her out of their matrimonial home 15 years ago, along with her three children, after 15 years of marriage. “I had earlier heard rumours about my husband and another woman. I knew he had girlfriends. He was doing well and living it up, though he took…

Ad

By ‘Dotun Akintomide

The signed a $2.5 billion bilateral currency swap between Central Bank of Nigeria (CBN) and the Peoples Bank of China (PBoC) will provide naira liquidity to Chinese businesses and provide RMB liquidity to Nigerian businesses respectively.

The transaction which is valued at Renminbi (RMB) 16 billion, or the equivalent of about $2.5bn is targeted at improving the speed, convenience and volume of transactions between the two countries

Confirming the swap, which has taken two years to negotiate, a statement
released Thursday by CBN spokesman Mr. Isaac Okorafor said the Governor of the CBN, Mr. Godwin Emefiele, led CBN officials while PBoC Governor, Dr. Yi Gang, led the Chinese team at the official signing ceremony in Beijing on Friday, April 27.

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

News on the swap comes at a time Nigeria’s foreign reserves have inched up to $48 billion on higher oil prices, giving the country leverage in its negotiations with the Chinese central bank.

“The deal, which is purely an exchange of currencies, will also 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,” CBN said in a statement.

It added that as the deal comes into effect, Nigerian manufacturers, cottage industry players and anyone who need imports from China will be able to secure RMB from Nigerian banks: “With the operationalization of this agreement, it will be easier for most Nigerian manufacturers, especially small and medium enterprises (SMEs) and cottage industries in manufacturing and export businesses to import raw materials, spare-parts and simple machinery to undertake their businesses by taking advantage of available RMB liquidity from Nigerian banks without being exposed to the difficulties of seeking other scarce foreign currencies.”

The CBN listed benefits of the deal to include helping both to manage their reserves better among other benefits: “It will also assist both countries in their foreign exchange reserves management, enhance financial stability and promote broader economic cooperation between the two countries.”

Ad

X whatsapp