By Adedapo Adesanya
Nigeria has moved to revive the Bilateral Currency Swap Agreement (BCSA) signed between Nigeria and China, to ease pressure in the foreign exchange market.
The House of Representatives on Wednesday resolved to liaise with the Central Bank of Nigeria (CBN) to speed up the implementation of the currency swap deal.
This resolution followed a motion moved by Mr Jafaru Leko, a Bauchi state representative during plenary, after the agreement not much has been heard on the financial instrument.
The CBN commenced the take-off of the scheme through the Special Secondary Market Intervention Sales (SMIS) retail dedicated to the payment of renminbi-denominated Letters of Credit (LCs) for raw materials, machinery and agriculture only.
In his motion, Mr Leko called for the outright adoption of the Yuan as one of the major currencies for Nigeria’s foreign reserve, stressing that monetary authorities must consider the Chinese Yuan as an alternative trading currency in the face of the decline of the Naira against the US dollar and major currencies.
Mr Leko called for the adoption of the Chinese Yuan (CNY) as an official foreign exchange reserve currency alongside others, calling on the apex bank to explore the appropriate mechanisms, policies, and partnerships required for the implementation of the shift to Yuan.
“Global economic landscape is evolving and international trade dynamics are shifting, with China assuming a leading role in global trade.
“People’s Republic of China has a stable and globally recognised currency, the Chinese Yuan (CNY), which is gaining recognition in international trade,” Mr Leko said.
To buttress his point, the lawmaker said, “Adopting the Chinese Yuan as an additional foreign exchange reserve currency might mitigate the adverse effects of Naira depreciation.”
He added that, “It would enhance Nigeria’s trade and economic ties with China, a crucial trading partner.”
However, the Deputy Speaker, Mr Ben Kalu, who presided over the session, said there was no need for the House to call for a new policy, instead, the government should revive the currency swap scheme.
Subsequently, Mr Sada Soli from Katsina moved an amendment to urge the speeding up of the 2018 current swap agreement.
The motion was passed as amended when Mr Kalu put it to vote.
The Committees on Banking Regulations, Banking and Other Ancillary Institutions were mandated to interface with the CBN on the policy and report to the House within four weeks.
