Naira Trades Flat at Black Market After Nigeria-China Currency Swap Deal

naira depreciate

By Dipo Olowookere

The Nigerian Naira closed flat on Thursday at the parallel market after the Central Bank of Nigeria (CBN) announced signing a $2.5 billion currency swap deal with its Chinese counterpart.

The agreement between both nations were finalised last Friday, but was only announced yesterday by the CBN.

At the black market on Thursday, the nation’s legal tender remained unchanged against the three major currencies at the foreign exchange market; Dollar, Euro and Pound Sterling.

Business Post reports that the Naira stayed glued at N362 per Dollar, N442 to the Euro, and N505 to a Pound Sterling at the parallel market yesterday.

According to spokesman of CBN, Mr Isaac Okorafor, the agreement with China is expected to provide Naira liquidity to Chinese businesses and provide RMB liquidity to Nigerian businesses respectively, thereby improving the speed, convenience and volume of transactions between the two countries.

Also, the currency swap is aimed at providing adequate local currency liquidity to Nigerian and Chinese industrialists and other businesses thereby reducing the difficulties encountered in the search for third currencies.

Furthermore, the deal will make it easier for most Nigerian manufacturers, especially small and medium enterprises (SMEs) and cottage industries in manufacturing and export businesses to import raw materials, spare -parts and simple machinery to undertake their businesses by taking advantage of available RMB liquidity from Nigerian banks without being exposed to the difficulties of seeking other scare foreign currencies.

The deal, which is purely an exchange of currencies, will also make it easier for Chinese manufacturers seeking to buy raw materials from Nigeria to obtain enough Naira from banks in China to pay for their imports from Nigeria.

The CBN said this will protect Nigerian business people from the harsh effects of third currency fluctuations.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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