The Central Bank of Nigeria (CBN) says on Thursday that it has signed the bilateral Currency swap agreement with the Peoples Bank of China (PBoC).
A statement by the apex Acting Director of Communications, Isaac Okorafor, noted that the Governor Mr. Godwin Emefiele, led CBN officials while PBoC Governor, Dr. Yi Gang, led Chinese team at the official signing ceremony in Beijing, China.
It said the agreement was signed on April 27th adding that it was an outcome of over two years of painstaking negotiations by both Central Banks.
“The transaction which is valued at Renminbi (RMB) 16 billion, or the equivalent of about 2.5billion dollars, is aimed at providing adequate local currency liquidity to Nigerian and Chinese industrialists and other businesses.
“It will thereby reducing the difficulties encountered in the search for third currencies,’’ it said.
According to the statement, the agreement will provide Naira liquidity to Chinese businesses and provide RMB liquidity to Nigerian businesses respectively.
This, it said would improve 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.
“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.
“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,’’ it said.
The statement noted that with this agreement, Nigeria had become the third African country to have such an agreement in place with the PBoC.
It added that both the Nigerian and Chinese officials expressed delight at the conclusion and signing of the agreement and expressed the hope that it would boost mutually beneficial business transactions between Nigeria and the Peoples Republic of China.