The Central Bank of Nigeria (CBN) has confirmed the execution of a $2.5 billion bilateral currency swap agreement with the Peoples Bank of China (PBoC).
The deal, which was sequel to the conclusion of negotiations on Friday, April 27, between the countries’ monetary authorities, is expected to boost local currency liquidity in the economies.
While the CBN governor, Godwin Emefiele, led the Nigerian delegation to seal the pact on behalf of the Federal Government, his Chinese counterpart and Peoples Bank of China (PBoC) Governor, Yi Gang, led the Chinese team at a ceremony in Beijing, China.
A statement by the CBN’s Acting Director of Corporate Communications Department, Isaac Okorafor, indicated that the transaction valued at Renminbi (RMB) 16 billion was to provide adequate local currency liquidity to Nigerian and Chinese industrialists.
The deal also aims at assisting other local businesses by reducing the challenges they usually face in the search for third currencies.
The apex bank’s spokesperson stated that the pact would facilitate the speed, convenience and volume of transactions between the two countries by making Naira available to Chinese businesses as well as providing RMB liquidity to their Nigerian counterparts.
It would be recalled that the Deputy Chinese Ambassador to Nigeria, Lin Jing, had disclosed recently that the volume of bilateral trade between Nigeria and his country grew by 30 per cent from 2016 to about $12.3 billion between January and November last year.
The envoy noted that apart from being the biggest Chinese investment destination in Africa, Nigeria was also the second largest export market and the third largest trading partner to China in Africa.
Okorafor expressed the hope that the currency swap deal would assist both countries in their foreign exchange reserves management, enhance financial stability and promote broader economic cooperation between them, amongst other benefits.