We’ll Reward You If You Bring An Invoice In Renminbi, CBN Tells Importers
If you are an importer who imports from China, the Central Bank of Nigeria, CBN will reward you if you bring invoices in Renminbi instead of in dollars.
So when next you ask for a quote from your Chinese suppliers, ask them for an invoice in the Chinese currency.
The CBN said it was doing that as a direct response to the recent rate hike by the United States central bank, the Federal Reserve Bank.
The apex bank disclosed this Thursday at a briefing at the end of the Bankers Committee meeting in Lagos. The Bankers' Committee is comprised of chief executives of banks and regulators
Recall that the American central bank raised its benchmark short-term interest rate a quarter percentage point on Wednesday and indicated that two more increases were likely this year.
So, why is CBN making this move? It is because the increase in benchmark interest rates in the US has the potential to redirect both foreign portfolio investments and foreign direct investments, from emerging markets like Nigeria to the US and could spark a pressure on Nigeria’s dollar reserve.
As a matter of fact, there is expected outflow of foreign exchange from the Nigerian market because of this decision as investors would like to take advantage of the higher rate in the US market.
But the CBN through its Director, Banking Supervision, Mr. Ahmad Abdullahi, is assuring Nigerians that there is no cause for alarm as the external reserve of the country had grown to $48 billion.
Now, back to the Renminbi incentive, Abdullahi said the decision jointly made by the CBN and the Bankers' Committee was to encourage importers to receive invoices in Renminbi instead of dollars.
“One of the incentives will be that a percentage spread which is yet to be determined will be given to any importer that is bringing Renminbi invoice for settlement instead of bringing dollar invoice so that when you look at the overall cost in terms of naira, if you bring Renminbi invoice, it is going to be cheaper for the importer.”
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