In a significant move to enhance bilateral trade and investment, China and Nigeria have renewed their currency swap agreement, now valued at 15 billion Yuan (approximately $2 billion). This renewed agreement, confirmed by the People’s Bank of China (PBOC) on December 28, 2024, will remain in effect for another three years, with the option for renewal upon mutual consent.
The arrangement, first signed in June 2018, allows for the direct exchange of the Chinese Yuan and Nigerian Naira, cutting out the US dollar and reducing transaction costs in trade between the two nations. This helps businesses in both countries overcome liquidity challenges and promotes the use of local currencies in trade.
By bypassing the dollar, the currency swap aims to streamline transactions and make trade between China and Nigeria more efficient. It provides Chinese businesses in Nigeria with access to Naira, while Nigerian firms trading in China can directly use Yuan. This mechanism has proven to be crucial in boosting the ease of doing business, facilitating investments, and ensuring a smoother flow of trade.
Under the agreement, the central banks of both countries will hold bi-weekly auctions to inject liquidity into their financial systems, promoting the purchase, sale, and repurchase of Yuan and Naira. These efforts are designed to support growing trade and investment activities while enhancing market efficiency.
This renewed agreement is a testament to the growing economic ties between China and Nigeria, reflecting a shared commitment to reducing reliance on the US dollar and fostering direct cross-border transactions. As both countries continue to strengthen their cooperation, this deal is expected to provide a stable foundation for the future of trade and investment.
At NIGPOST, we’ll continue to keep you updated on the developments of this important economic partnership. Stay tuned for more news.
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