- The CBN has carried out a a $2.5 billion bilateral currency swap with China
- Isaac Okoroafor, CBN's images maker, reported that the agreement between both nations came after serious deliberations that last for two years
- Okoroafor also stated that the swap would provide local currency liquidity for both Nigerian and Chinese businessmen
The Central Bank of Nigeria (CBN) has reported that it executed a $2.5 billion bilateral currency swap agreement with the Peoples Bank of China (PBoC).
Godwin Emefiele, the governor of the CBN led his operatives while PBoC boss, Yi Gang, spearheaded the Chinese team at the official signing ceremony in Beijing, China on Friday, April 27.
Isaac Okoroafor, CBN's images maker, in a statement revealed that the resolve was a result of over two years of critical negotiations by both apex banks. The swap would provide local currency liquidity for both Nigerian and Chinese entrepreneurs, the Vanguard reports.
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Okoroafor said: “The transaction, which is valued at Renminbi (RMB) 16 billion, or the equivalent of about $2.5bn, is aimed at providing adequate local currency liquidity to Nigerian and Chinese industrialists and other businesses thereby reducing the difficulties encountered in the search for third currencies.
“Among other benefits, this agreement will provide Naira liquidity to Chinese businesses and provide RMB liquidity to Nigerian businesses respectively, thereby improving 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 by taking advantage of available RMB liquidity from Nigerian banks without being exposed to the difficulties of seeking other scarce foreign currencies.
“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. With this, Nigeria becomes the third African country to have such an agreement in place with the PBoC.
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“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.”
Meanwhile, Legit.ng reported that President Muhammadu Buhari had given out new orders from Beijing, China.
According to a statement issued by Shehu Garba, the presidency's senior special assistant on media and publicity, the president directed that technical committees be immediately established to finalize discussions on new joint Nigeria/China rail, power, manufacturing, agricultural and solid mineral projects.
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