Nigeria-China Currency Swap

Nigeria and China recently signed a bilateral agreement to operate a three-year currency-swap deal aimed at facilitating enhanced trade between both countries. At a value of $2.5 billion it translates into N720 billion for Nigeria and RMB15 billion (Chinese Rheminbi, formerly Yuan) for China respectively. The event which took place in Beijing, China saw Governor of the Central Bank of Nigeria (CBN) Mr. Godwin Emefiele standing for Nigeria while Dr Yi Gang of the Peoples Bank of China (PBoC) represented his country. Since the deal was struck, mixed reactions have flowed freely with commendation of the initiative dominating.

A currency swap is a process whereby two countries elect to denominate aspects of their mutual trade on a direct exchange between their respective national currencies, instead of a third-party value standard that is extraneous to them, which in the present global system is the US dollar. Under the currency swap arrangement, trade between Nigeria and China will be denominated in a direct exchange between the Naira and China's currency the Rheminbi.

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