The Association of Bureaux De Change Operators of Nigeria has described the $2.5 billion currency swap agreement between the Central Bank of Nigeria and the People’s Bank of China as a move to promote naira’s sovereignty in Africa.
President, ABCON, Alhaji Aminu Gwadabe, who spoke with our correspondent over the weekend in Lagos, explained that the naira would benefit hugely from the deal, given the rising influence of Chinese Yuan in the international market.
According to him, the admittance of Yuan into the basket of International Monetary Fund currencies and the Naira/Yuan swap deal will actualise the dream of naira sovereignty in Africa.
The naira has remained stable at both the official and parallel markets, as the CBN continues its weekly dollar interventions. The naira, which in February 2017, was exchanged at N520/$ in the parallel market, now exchanges at N361/$ while rate at the official market remains N305.9/$. The yuan has equally made significant progress this year, appreciating 1.8 per cent against the dollar, to become the world’s second-strongest Asian
currency.
The ABCON boss also urged the CBN to consider diversifying dollar disbursement to BDCs with percentage amount of yuan to meet the critical needs of their numerous clients travelling to China for personal and business purposes. He added that if implemented, such a move will further deepen the interest in purchasing yuan and reducing dollar demand.
Gwadabe disclosed that the currency swap deal was part of the CBN’s plan to keep the naira stable and protect the foreign reserves domiciled in dollars. He said the deal would provide adequate local currency liquidity for Nigerian and Chinese industrialists and reduce difficulties they face in searching for the
greenback.
He said, “In local currencies, the swap is worth 15 billion Renminbi (RMB)/yuan or N720 billion and the three-year renewable deal will allow for the direct exchange of RMB and naira for the purpose of trade and direct investment between the two countries. The agreement could be renewed on expiration, at the instance of both countries.
“BDCs will equally benefit from the swap deal given that a stable and strong naira is good for the economy and operators. The increased use of yuan in trade deals will also open a new business opportunity for BDC
operators.”
He added that China has remained Nigeria’s largest import partners over the last five years, with imports from China standing at over 20 per cent of Nigeria’s total imports and advised that to achieve the full gains of the deal, Nigeria has to take steps that boost its trade balance with China by raising the quality of its local products to make them more attractive and acceptable to the Chinese people.
