The Central Bank of Nigeria (CBN) has agreed to a $2.5 billion bilateral currency swap with the Peoples Bank of China (PBoC).
Isaac Okorafor, apex bank spokesman who confirmed the swap, which has taken two years to negotiate, 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.
The transaction which is valued at Renminbi (RMB) 16 billion, or the equivalent of about $2.5 billion, is aimed at providing adequate local currency liquidity to Nigerian and Chinese industrialists and other businesses, thereby reducing the difficulties encountered in the search for third currencies, said the statement.
Among other benefits, this agreement will provide naira liquidity to Chinese businesses and provide RMB liquidity to Nigerian businesses respectively, thereby improving the speed, convenience and volume of transactions between the two countries.
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.