FG seeks $10 billion Naira-Yuan swap with China

$2.5 billion swap will expand to $10 billion for smoother trading

… A move is expected to reduce demand for the US dollar

Daud Olatunji

The federal government is in advanced talks with China to expand the existing Naira-Yuan currency swap from $2.5 billion to $10 billion, a move aimed at easing pressure on the US dollar, stabilizing the naira and reducing Nigeria’s $23 billion trade deficit with Beijing.

Joseph Tegbe, director general of the Nigeria-China Strategic Partnership, said the expanded exchange will allow Nigerian businesses to transact directly in yuan, eliminating the need to convert the naira into dollars before trading with China.

“A Nigerian business should be able to pay in naira and receive yuan directly in China. Currently, the dollar acts as an unnecessary intermediary, increasing demand for US currency,” he explained.

Tegbe added that for the exchange to be effective, Nigeria’s foreign exchange reserves must be at a comfortable level, a goal the Central Bank of Nigeria is pursuing.

The swap, first introduced in 2018, allows the two countries to exchange principal and interest in local currencies, promoting smoother trade and reducing dependence on the dollar.

Trade between Nigeria and China remains heavily skewed in favor of China, with only $2 billion of the $23 billion trade volume accounting for Nigerian exports.

To address this issue, Tegbe said Nigeria is accelerating export protocols to take advantage of China’s zero tariff policy for African countries, covering products such as hides, cashews, crabs and shrimps.

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