How Nigeria-China Currency Swap Deal Will Affect The Naira - Economist
You may recall that recently Nigeria and China signed a currency swap deal totaling $2.5 billion.
This deal will allow businesses trading with China access to Chinese Yuan while still in Nigeria while Chinese doing business in Nigeria will access the naira in China.
You know, before now, Nigerian businesses who want to transact any business in China will first buy dollars in Nigeria before going to China where they will in turn change it into Chinese Yuan.
This isn’t just expensive but piles more pressure on the naira as more Nigerians demand for dollars to trade with China.
This is why an economist, Dr Chijioke Ekechukwu, said the naira will gain strength against the dollar when the Nigeria -China currency swap eventually takes effect.
Already, First Bank of Nigeria Limited, Stanbic IBTC, Standard Chartered Bank (SCB) and Zenith Bank Plc have been appointed as settlement banks by the CBN.
Ekechukwu, a former Director-General, Abuja Chamber of Commerce and Industry told newsmen in Abuja that it's expected to reduce pressure on the dollar as letters of credit and other valid payments for imports from China will be in the Chinese currency.
“Foreign currency availability will no longer delay or impede importation of goods and services, especially from China,” he said.
Ekechukwu also said that what this deal means “to Nigeria and Nigerians is that at the agreed repayment date, we have the option to repay in the Chinese currency of renminbi (RMB) as against the U.S. dollar.
“More foreign exchange in RMB will be available to the Central Bank of Nigeria to fund our importation and foreign settlement needs, especially from China,” he added.
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