Nigeria, China have announced they will conduct a currency swap amounting to nearly $2.4 billion, making trade between the two countries less reliant on the US dollar.
I n a statement released by the People’s Bank of China (PBoC), the deal was signed on agreement with the Central Bank of Nigeria (CBN) on April 27 and aims to facilitate “bilateral trade and direct investment, and safeguarding financial market stability in both countries.”
It has taken longer than anticipated, but FINALLY the Chinese Renminbi Swap Deal is here! 🙌
Signed April 27, 2018, between @cenbank & the People's Bank of China. The Swap Facility is worth RMB 15 billion/NGN 720 billion; valid for three years, renewable.https://t.co/0B5gpQf7PL pic.twitter.com/BnJLZ3jj9r
— tolu ogunlesi (@toluogunlesi) May 3, 2018
In local currencies the deal is worth 15 billion Renminbi or 720 billion Naira.
The currency swap is valid for three years and can be renewed following the approval of both countries.
Nigeria is looking to improve its trading relationship with the world’s second largest economy.
According to data by Bloomberg in 2017, after the US, China is Nigeria’s top trading partner. China’s imports from Nigeria include mostly gas, oil and rough wood, and amounted to $953 million in 2016, the Observatory of Economic Complexity (OEC) reported.
Perhaps more crucially, though, are China’s exports to Nigeria which amounted to $13 billion in 2016.
The two countries will hope the currency swap will mitigate the need for outside currencies, adding more stability to their bilateral trade.
“Any arrangement that Nigeria can make to ease access to foreign exchange is positive for the country,” said Ayo Teriba, CEO of Economic Associates. “$2.4 billion dollars is not a big amount but for Nigeria the situation will make a difference.”
See More- Source: CNN