Nigeria and China Renew $2 Billion Currency Swap Agreement
Nigeria and China have renewed their bilateral currency swap agreement for three more years with option of further extension by mutual consent.
The People’s Bank of China (PBOC) announced this on Friday saying the agreement is worth 15 billion yuan which is about $2.09 billion or 3.28 trillion naira.
PBOC said this is to deepen financial cooperation between China and Nigeria, promote the use of their local currencies and facilitate bilateral trade and investment.
The currency swap agreement was first signed in 2018 after two years of negotiations. The original agreement was worth about $2.5 billion and was designed to provide local currency liquidity for businesses in both countries. It was to reduce dependence on third party currencies, enhance bilateral trade and investment and stability in both countries.
China and Nigeria have a long history of economic cooperation, bilateral trade was $19.27 billion in 2019. The renewal of the currency swap agreement will further strengthen this relationship and give businesses in both countries easier access to local currencies and reduce transaction cost and simplify trade process.
This also aligns with China’s plan to internationalize the yuan and support the stability of the naira in the global market. By allowing direct exchange between naira and yuan, both countries want to reduce their dependence on the US dollar for bilateral transactions and have a more diversified and resilient economic relationship.
The renewal of the agreement shows the level of commitment to strengthening the economy and support its growth. As the two countries navigate the global economy, such partnerships will assist in achieving mutual economic goals and long term stability.
