Following the sale of 69,707,333.39 million Chinese Yuan (CNY) in the spot and short-tenored forwards, the Central Bank of Nigeria (CBN) has injected $327.4 million into the inter-bank retail Secondary Market Intervention Sales (SMIS).
The dollar-dominated intervention is meant for only agricultural and raw materials sectors concerns.
CBN’s Acting Director of Corporate Communications, Isaac Okorafor said the exercise, which was in line with the CBN guidelines, was for the payment of Renminbi-denominated letters of credit for agriculture as well as raw materials.
While noting that availability of Renminbi was sure to ease pressure on the Nigerian foreign exchange market, Okorafor said the releases remained targeted at boosting production and trade in addition to sustaining liquidity in the market.
He further stated that the CBN would remain committed to ensuring that all the sectors continue to enjoy access to the needed foreign exchange.
Currently, the dollar exchanged for N360 at Bureau de Change (BDC) segment of the foreign exchange market, while CNY 1 exchanged for N53.35.
Last May, Nigeria and China had finalised a currency swap deal. The swap deal was to ensure ease of doing business between both countries. The deal was signed by CBN Governor, Godwin Emefiele on behalf of Nigeria, while PBOC Governor, Yi Gang signed on behalf of China.
Prior to the currency swap, preliminary discussions concerning the swap began in 2011 when the then CBN Governor, Lamido Sanusi had suggested that Nigeria would hold a small percentage of its reserves in renminbi.
Also, the Industrial and Commercial Bank of China Ltd (ICBC), and the CBN had signed a deal on Yuan transactions.
The Naira-Yuan currency swap deal, would not cover the importation of 41 items listed as banned items in CBN’s 2015 circular.
Meanwhile, in the last two decades, bilateral trade between Nigeria and China has grown rapidly, rising from $2.8 billion in 2005 to $14.9 billion in 2015, which is a 430% increase.
China is Nigeria’s trading partner after the United States, with volumes totaling $9.2 billion in 2017.
