Currency Swap Agreement Nigeria And China

If properly implemented by the CBN and used effectively by importers, this window could only be a policy that would successfully reduce the pressure on the Naira exchange rate, reduce the influence of the third monetary operation (USD), while facilitating trade transactions between Nigeria and China. The most important thing is that the government should focus not only on imports, but also, to a large extent, on exports, so that there is a trade balance between Nigeria and China. The swap facility amounts to RMB 15 billion/NGN 720 billion. The contract is valid for three years and can be renewed by mutual agreement. Despite the concerns expressed, we believe that the currency swap agreement is a step in the right direction. The decline in dollar demand, which is expected to be achieved through the swap agreement, will complement CBN`s current intervention through the FX Window on behalf of investors and exporters to deepen market stability by limiting the impact of dollar scarcity and exchange rate volatility. We also note that the NGN/CNY swap agreement will be particularly favorable to Nigeria`s foreign exchange reserves, which have steadily increased since some degree of stability returned to the country`s daily crude oil production and international oil prices began a northward movement. . . .

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