Nigeria, China in CNY1.75bn bilateral currency swap

After the Central Bank of Nigeria signed a bilateral currency swap agreement with the People’s Bank of China in April 2018, a total of CNY1.75bn has been auctioned on the market since the end of June 2020.

The CBN announced this in its ‘Financial Markets Department 2020 Half Year Operation Report’ that was published on Wednesday.

Some parts of the report read, “The bank continued with the implementation of the bilateral currency swap agreement with the People’s Bank of China through fortnightly Renminbi auctions, which commenced in July 2018.

“In the review period, 13 auctions were conducted and Renminbi worth CNY294.09m was sold from the drawdown of CNY1bn.

“In the corresponding period of 2019, Renminbi worth CNY483.18m, from the drawdown of CNY1bn, was also sold in 13 auctions.

“CNY1.746bn has been sold from inception to end-June 2020.”

The goal of the agreement between the two countries was to provide Nigerian and Chinese industrialists and other companies with adequate local currency liquidity.

It was also targeted at providing Chinese enterprises with Naira liquidity and to provide Nigerian enterprises with RMB liquidity, thereby improving the speed, convenience, and volume of transactions between the two countries.

The goal of the agreement was to reduce the difficulties faced in seeking a third currency.

It was also intended to help both countries manage their foreign exchange reserves, enhancing financial stability and encouraging wider economic cooperation between the two countries.