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Nigeria-China Currency deal

Question:

Recently the Nigerian and Chinese government signed a bilateral currency swap agreement that will see Nigeria swap $2.5 billion for 16 billion Chinese Renminbi (RMB).

What is the significance of this deal? Would it be mutually beneficial to both parties at equal levels in the short and long term? How much will this deal ease trade between both countries? What are the future implications of this deal in the future?

Dear kennylee,

Great question and many thanks for joining the Forum.

On the question, I am not really knowledgeable about the technicalities associated with such deal. I have however, shared your question on our social media platforms and tried inviting resource persons who possibly could assist us with more insight.

I read on the swap deal last month on Nairametrics and the article (written in 2016) gave a really down-earth explanation.

The basic significance of the deal I learnt from the article is how Nigerian business people importing goods from China can now get direct access to Yuan rather converting to US dollars - thereby easing the pressure on the US dollars. Personally, I think it is a good move if only there can be transparency and accountability of such deals by the Nigerian government.

A more recent update by Nairametrics on the swap deal can be seen here.

Also, the swap I believe is equivalent to about $2.5 billion rather than a direct $ and Yuan swap but Naira and Yuan.