Nigeria and China have Renewed their Bilateral Currency Swap Agreement
The renewal of the agreement will allow Nigerian banks to access renminbi through the Central Bank of Nigeria (CBN), allowing companies to open renminbi letters of credit for Chinese imports. As China’s global trade influence continues to expand, the RMB’s status as a reserve currency is increasingly recognized. In 2016, the International Monetary Fund (IMF) included the renminbi in its Special Drawing Rights basket along with the U.S. dollar, euro, Japanese yen and British pound. For Nigeria, the agreement could help reduce demand for dollars, which contributes to exchange rate fluctuations and inflation. By using the yuan more for trade, businesses can avoid the additional cost of converting naira into dollars and then back into yuan.
