CBN To Renew Currency Swap Deal With China

The Central Bank of Nigeria, CBN, says the currency swap deal it signed with the Peoples Bank of China has not been abandoned.

The apex bank made the clarification in its response to suggestions that the CBN has not fully taken advantage of the agreement signed in 2018, which allows Nigerian and Chinese investors to pay for imports in both country’s local currencies.

Nigeria and China In May 2018, signed a currency swap deal valued at renminbi (RMB) 16 billion. Renminbi is the official currency of the People’s Republic of China, and means “people’s currency” in Mandarin. A yuan is a unit of the currency.

The issue became more controversial recently after Femi Falana, a senior lawyer and rights activist accused the apex bank of abandoning the agreement.

Falana claimed that despite the currency swap agreement, the federal and state governments, and business community have been “prevented from transacting business in naira and yuan

The Senior Advocate of Nigeria, SAN, later wrote the CBN demanding an explanation under the Freedom of Information, FOI.

Reacting, the CBN said the agreement is progressive, saying it renewed the bilateral currency swap deal in 2021 after the first agreement expired to show its seriousness about.

The agreement is due to be renewed next year, according to the Folashodun Shonubi-led CBN.

According to the explanation provided by CBN, “The swap commenced in July 2018, expired in April 2021, and was subsequently renewed. The sum of CNY 15.00 billion was the overdraft amount usable within the year,” the apex bank disclosed this in a response dated August 8, 2023.

“Since its renewal, CNY9.00 billion had been drawn, CNY6.00 billion utilized and CNY3.00 billion outstanding, and out of the CNY6.00 billion utilized, the sum of CNY5.10 billion had been repaid, while the sum of CNY2.10 billion had not been utilized, leaving the sum of CNY900.00 million yet to be repaid. Furthermore, the next renewal is expected to take place in 2024.”