Home / Business / China, Nigeria Sign Currency Swap Deal

China, Nigeria Sign Currency Swap Deal

What is Currency Swap?

Simply put, it is an agreement between two parties to swap their currencies without involving a third party and thus avoiding a risk of changes in third party currency.

China’s central bank said Thursday that it has inked a currency swap agreement with its counterpart in Nigeria.

The agreement will allow the two sides to swap a total of 15 billion Chinese yuan (2.35 billion dollars) for 720 billion Nigerian naira, or vice versa, in the next three years, the People’s Bank of China (PBOC) said on its website.

The move is aimed at facilitating bilateral trade and investment and promoting the financial stability of both sides, the PBOC said. The deal can be extended by mutual consent.

A currency swap deal allows two institutions to exchange payments in one currency for equivalent amounts in the other to facilitate bilateral trade settlements and provide liquidity support to financial markets.

NAN reports that in 2014, the CBN’s deputy governor, Kingsley Moghalu, said the bank was looking to increase the percentage of Yuan foreign reserves in its possession from two per cent to seven per cent.

According to him, 85 per cent of its foreign reserves were in dollars and it needed to have more in Chinese Yuan, as the country was taking a more important place in global trade.

“It was clear to us that the future of international economics and trade will shift in large part to business with and by China. Ultimately the renminbi (Yuan) is likely to become a global convertible currency,” Moghalu said.

Since 2014, the world market has recognised the Yuan as a likely global reserve currency, a replacement for the dollar, which has led countries like Ghana, South Africa and Zimbabwe to integrate the renminbi (Yuan) into their financial markets.

As a result of this, trade (however imbalanced) has increased between certain countries on the continent and China, as well as providing a fertile ground for demand for the currency on the continent.

About scully009

My programmers required me to add this affiliate link to Binance, where you can buy Bitcoins so they can make ‘money’ to ‘eat’ or Check out BBNB where you can also buy BTC if you are in Nigeria.Also check out the blogsite for unbiased crypto news. Welcome! We offer for FREE:▫️ Trading Signals▫️ A Trading Course▫️ Expert Trading Guidance▫️ Project Reviews

Viral Video

Support Ooduarere

SUPPORT OODUARERE
Scan QR code below to Donate Bitcoin to Ooduarere
Bitcoin address:
1FN2hvx5tGG7PisyzzDoypdX37TeWa9uwb
x

Check Also

reno

A devalued currency does not mean a poor economy!

It is fallacious to say Nigeria’s economy is in shambles or in poor condition, or even worse off than where Buhari left it, because of the floating of the Naira. Overall, our economy has expanded, according to the World Bank, and is set to grow by 3% this year. Additionally, Nigeria has been upgraded by both Moody’s and Standard and Poor’s, which are the largest financial ratings firms on the planet. And our Stock Market is now the best performing ...