CBN Currency swap forex rates Godwin Emefiele led some CBN officials to the signing ceremony in Beijing, China. His PBoC counterpart Yi Gang headed the Chinese team. The pact was the result of over two years negotiations between both banks. The transaction is aimed at providing adequate local currency liquidity for Nigerian and Chinese industrialists and other businesses in order to reduce their difficulties in the search for a third currency.
In a statement, CBN Acting Director, Corporate Communications Isaac Okorafor explained that Chinese businesses would get naira liquidity and Nigerian businesses, RMB liquidity under the agreement. This, he said, would improve the speed, convenience and volume of transactions between both countries. It will also assist both countries in their foreign exchange reserves management, enhance financial stability and promote broader economic cooperation between them. To facilitate their imports, they can get RMB facility 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 naira from Chinese banks to pay for their imports. The pact will protect Nigerian businesses from the harsh effects of third currency fluctuations. Nigeria is the third African country to have this kind of agreement with the PBoC.
Nigerian and Chinese officials expressed delight at the signing of the agreement and expressed hope that it would boost mutually beneficial business transactions between their countries. N720 billion, or vice versa, in the next three years, PBoC said on its website. The move is aimed at facilitating bilateral trade and investment and promoting the financial stability of both countries, the PBoC said. The deal can be extended by mutual consent. A currency swap deal allows two institutions to exchange payments in one currency for equivalent amounts in order to facilitate bilateral trade settlements and provide liquidity support to financial markets.