In a strategic move to enhance bilateral trade and reduce reliance on the US dollar, Nigeria and China have renewed their currency swap agreement, worth 15 billion Yuan (approximately $2 billion). This agreement, confirmed by the People’s Bank of China (PBOC), will remain in effect for another three years, with an option for renewal upon mutual consent.
Originally signed in June 2018, the currency swap arrangement allows for the direct exchange of the Chinese Yuan and Nigerian Naira, bypassing the US dollar and lowering transaction costs for businesses in both nations. The new deal is designed to foster trade between the two countries, improve liquidity, and support seamless transactions between Chinese and Nigerian businesses.
The deal offers a key benefit to both economies by providing liquidity in each other’s currencies—Naira for Chinese firms operating in Nigeria and Yuan for Nigerian companies engaged in trade with China. This will streamline transactions, encouraging increased bilateral investments and greater market efficiency.
The currency swap arrangement has already played a significant role in addressing liquidity challenges for businesses in both countries. As part of the renewed deal, bi-weekly auctions will be held to inject liquidity into their financial systems, promoting trade and investment activities.
The renewal of the agreement highlights the growing economic ties between China and Nigeria, as both countries look to strengthen their relationship and reduce their dependence on the US dollar for international trade.
