The Nigerian Government reported that it had agreed a foreign currency swap deal with China following the President Buhari’s trip to China. President Muhammadu Buhari and the Governor of Central Bank of Nigeria (CBN), Mr Godwin Emefiele signed the agreement with the Industrial and Commercial Bank of China Ltd in China on April 2nd.
According to an article in the Guardian, a Bureau De Change operator, Alhaji Ibrahim Yelwa believes that the swap deal will help reduce the demand for the dollar from Nigerians looking to import goods from China.
“The agreement between China and Nigeria means that the de facto currency — dollar — will no longer hold on the import and export deals between the two countries.
“The quest for dollar through our banks will definitely reduce as all transactions between Nigeria and China will be in Yuan instead of dollar,’’ he said.
He observed that oil sales from Nigeria to China would be settled in Chinese currency, stressing that access to Yuan would also be easier.
“The swap will eliminate challenges arising from transactions with the dollar and promote business flexibility between Nigerian and Chinese,’’
The currency crisis currently facing Nigeria is made worse due to the CBN’s dwindling foreign dollar reserves and the fact the they have not been able to reduce the demand for dollars. Most of the dollar demand is also thought to be mainly due to Nigeria’s dependency on foreign imports particularly from China. Nigeria’s official import numbers for the whole of 2015 was N6.6 trillion with China being the single largest country of import with N1.5 trillion alone.