CBN releases guidelines for Nigeria-China currency swap

The Central Bank of Nigeria (CBN) has released guidelines for the recently signed bilateral currency swap between the country and China.

The new swap agreement will see both banks, among other purposes, make available liquidity in their respective currencies for the facilitation and promotion of trade and investment across the two countries through the purchase, sale and subsequent repurchase and resale of Chinese yuan against the naira and vice versa in which the apex bank may organize a biweekly bidding.

On the eligibility for the bi-weekly bidding, the guideline stipulates that authorised dealers (Deposit Money Banks and Merchant Banks) shall open a Renminbi account with a correspondent bank and advise the CBN with Renminbi account details which may either be a bank onshore or offshore.

Importers intending to import from China shall obtain a proforma invoice denominated in Renminbi as part of the documents for the registration of form M.

The CBN will conduct a bi-weekly Renminbi bidding session and sales are applicable to only trade backed transactions.

Authorised dealers are required to utilize the funds within 72 hours from the value date, from where the CBN will debit authorised dealers’ current accounts on the day of intervention with the naira equivalent of the Renminbi bid request.

With this guideline in place and operation, Nigerian businessmen importing goods from China can now get direct access to Yuan rather than converting to dollars.

Data from the Nigerian Bureau of Statistics (NBS) Foreign Trade Report for Q1 2018 shows China is the country’s largest import partner accounting for 21.09%, valued at N530 billion for all imports.