The Central Bank of Nigeria (CBN) says
the bilateral currency swap agreement with the Peoples Bank of China
(PBoC) will help the liquidity issues faced by Nigerian traders and
Chinese manufacturers.
The apex bank said with the deal, Chinese
businessman will have sufficient naira to purchase raw materials from
Nigeria and Nigerian importers will not endure the challenge of ‘third
currency’ fluctuations when trying to make payments for Chinese exports.
CBN
“The
deal, which is purely an exchange of currencies, will 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 from Nigeria.
“Indeed, the deal will protect Nigerian
business people from the harsh effects of third currency fluctuations,”
CBN said in a statement.
It added that as the deal comes into
effect, Nigerian manufacturers, cottage industry players and anyone who
need imports from China will be able to secure RMB from Nigerian banks:
“With the operationalization 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 scarce foreign currencies.”
The CBN listed benefits of the
deal to include helping both to manage their reserves better among other
benefits: “It will also assist both countries in their foreign exchange
reserves management, enhance financial stability and promote broader
economic cooperation between the two countries.”
