You Can Now Buy Chinese Yuan From CBN Starting From July
You already know that the Central Bank of Nigeria, CBN and Peoples Bank of China last month signed a currency swap deal worth $2.5 billion.
The deal is expected to facilitate trade between the two countries and enhance foreign reserve management.
Already, the apex bank has appointed Standard Chartered Bank, Stanbic IBTC, First Bank of Nigeria and Zenith Bank as settlement banks.
And by next month, it will start auctioning Chinese yuan at an exchange rate to be set via book building.
Book building means the apex bank will use the record of demand for the Chinese currency to determine what price to offer them.
According to a CBN circular, the auctions will hold every two weeks.
It is not entirely suprising that the apex is looking for other avenues to diffuse pressure on the naira – part of lessons learned from overdependence on US dollars as the main trade currency.
Recall that in February, Britain’s export finance agency said it will add the naira to its list of “pre-approved currencies”, allowing it to provide financing for transactions with Nigerian businesses denominated in the local currency.
The Central Bank said the renminbi would only be used to finance trades with China and that local lenders have 72-hours to utilize the funds or return it to the Central Bank.
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