The Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has announced Standard Chartered Bank and Stanbic IBTC Bank as settlement banks in currency swap agreement between it and Peoples Bank of China (PBoC).
This is even as the apex bank also announced plans to release framework for the currency swap deal between the two regulatory financial institutions next week.
Confirming the nomination of the two banks in a statement, the apex bank’s Acting Director, Corporate Communications, Mr. Isaac Okorafor, said the Emefiele led CBN officials while PBoC Governor, Dr. Yi Gang, led Chinese team at the official signing ceremony in Beijing, China, on Friday 27th April 2018.
The signing ceremony culminated over two years of negotiations by both regulatory banks.
He stated: “The transaction which is valued at Renminbi (RMB) 16 billion, or the equivalent of about $2.5billion, 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.
“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”, Okorafor stated.
According to him, with the operationalisation of this agreement, it will be easier for most Nigerian manufacturers, especially small and medium enterprises (SMEs) and cottage industries in manufacturing and export businesses to import raw materials, spare-parts and simple machinery to undertake their businesses by taking advantage of available RMB liquidity from Nigerian banks without being exposed to the difficulties of seeking other scare foreign currencies.
Similarly, the apex bank’s spokesperson pointed out that the dealwill also make it easier for Chinese manufacturers seeking to buy raw materials from Nigeria to obtain enough Naira from banks in China to pay for their imports as well as protect Nigerian business people from the harsh effects of third currency fluctuations.
The signing of the currency swap pact makes Nigeria the third African country to have such an agreement in place with the PBoC.
Okorafor stated that at the conclusion and signing of the agreement officials of the two countries expressed the hope that it would boost mutually beneficial business transactions between Nigeria and the Peoples Republic of China.
