Three years after the Central Bank of Nigeria (CBN) signed a currency swap deal with the People’s Bank of China (PBoC), Nigerians are yet to feel the impact of that arrangement, especially as the free fall of naira, currently standing at N570/$1 at the parallel market persists.
In April 2018, the CBN issued the regulations for a US$2.5 billion currency swap agreement in June same year; designed to facilitate trade between the two countries and enhance foreign reserve management.
But tongues have already started wagging that the N720 billion swap deal for at least 15 billion Yuan (Renminbi) (equivalent of $2.4 billion in June 2018) between the two countries has failed to achieve its purpose since it was sealed.
The Bilateral Currency Swap (BCS) agreement was inspired by trade facilitation. It was to allow importers of goods from China to conclude their transactions in Yuan instead of the US Dollar) and vice-versa. This was done to reduce the demand of the US dollars, lift the undue pressure on the naira at the time, consistent with the CBN’s naira management strategies.
While the CBN has continued with the implementation of the BCS with the Peoples’ Bank of China through fortnightly Renminbi auctions, it was gathered that bureaucratic bottlenecks have become a major challenges for traders and importers transacting business with China.