Trading in Chinese Renminbi to Commence Before End of July, Says CBN
Moves against currency hawkers
The Central Bank of Nigeria (CBN) yesterday disclosed that trading in the Chinese Renminbi would commence before the end of this month.
A top CBN official, who disclosed this in a chat with THISDAY, said the CBN was finalising modalities for the trading in the Chinese currency.
This followed a $2.5 billion bilateral currency swap agreement signed in May between the CBN and the People’s Bank of China (PBoC).
According to the source, the CBN wants to ensure that the regulations around the trading of the Renminbi are tightened so as not to create any room for arbitrage and currency manipulation.
“All hands are on deck, all the work is being done and in the next two weeks trading will commence.
“There will be very marginal discount to encourage people to go for it. But the discount will be so small as not to encourage arbitrage, but encourage those who really want to do so that they can get an advantage for embracing the Renminbi currency,” the source added.
The CBN recently held town hall meetings in some cities in the country in its bid to woo businesses importing goods from China to use the Yuan instead of the United States dollar in its effort to support its naira currency and boost reserves.
Officials said the deal was aimed at reducing reliance on the dollar and “as such, reduce the pressure on the naira-dollar exchange rate.”
Under the swap arrangement, the central bank would hold N720 billion in an account in favour of the PBoC while the Chinese central bank would hold 15 billion Yuan, implying an exchange rate of N48 to the Yuan.
The bank also said the move was aimed at encouraging Chinese firms buying local raw materials and semi-finished goods to pay in naira.
THISDAY had reported that First Bank of Nigeria Limited, Stanbic IBTC, Standard Chartered Bank (SCB) and Zenith Bank Plc had been appointed the settlement banks for the bilateral currency swap deal.
Meanwhile, the CBN has warned that hard times now await hawkers of the naira, especially those who exchange new currency notes for old ones at motor parks or parties and other social functions.
CBN over the weekend in Ibadan assured economic agents such as the marketers, merchants, shopping malls, supermarkets of the bank’s continuous and direct supply of huge volumes of the banknotes to traders’ unions.
The development, according to the acting Director, Currency Operations Department, CBN, Mrs. Priscilla Eleje, was to ease difficulties being encountered by the traders and customers occasioned by the inadequate circulation of the lower denomination banks notes like N200, N100, N50, N20, N10 and N5.