Nigeria/China sign Currency Swap
The currency swap agreement between Nigeria and China, which was sealed recently and valued at Renminbi (RMB) 16bn according to the CBN spokesperson, Isaac Okorafor, is to provide adequate local currency liquidity to Nigerian and Chinese businessmen. The deal is also to assist other local businesses by reducing the difficulties usually encountered in search of third currencies. The idea to diversify foreign reserves was first mooted in 2004 by the CBN to increase the percentage of Yuan in Nigeria’s foreign reserves from two percent to about seven percent. However, the initiative seemed to have been subdued until about two years ago when the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, and the Peoples Bank of China revived the initiative which is now a reality. Since 2014, Yuan, the Chinese currency has assumed greater prominence in world trade with some countries seeing it as a global reserves currency. With the deal, Nigeria became the fourth country in Africa (after Ghana, South Africa and Zimbabwe) to sign on to Yuan for its trading and financial market transactions.