The Central Bank of Nigeria (CBN) Tuesday revealed plans to increase the Chinese Yuan’s proportion of the country’s external reserves from two percent to seven percent.
The move was influenced by the growing strength of the Chinese currency in global trade, the Deputy Governor (Operations), CBN; Dr. Kingsley Chiedu Moghalu said in an interview with Bloomberg in London.
However, Moghalu did not specify the timeframe for the change.
Nigeria currently holds about 85 percent of its reserves in dollars, he said.
Moghalu added: “It was clear to us that the future of international economics and trade will shift in large part to business with and by China.
“Ultimately the renminbi is likely to become a global convertible currency.”
The central bank started to diversify its reserves into Yuan in 2011 and is working with the People’s Bank of China to boost the holdings as soon as the relevant structures are in place, he said further.
Nigeria’s external reserves stood at $43.182 billion as at Monday.
The CBN Governor, Mallam Sanusi Lamido Sanusi had last September insisted that the central bank’s decision to diversify the country’s reserve base from the United States dollar by investing in China’s Renminbi had paid-off two years after.
He said Yuan, also known as the Renminbi had been appreciating in value. Sanusi had argued that a lot of countries were beginning to diversify their reserve currencies in other emerging economies that were showing promises.
Sanusi had said: “The issue about risk is changing because of the dynamics of the global economy and you know pretty well that currently there are issues around the strength of the currencies all over the globe and the debate is ongoing on whether or not, the dollar would continue to be the de-facto reserve currency.
“That’s why so many countries are changing the basket of currencies where they keep the reserves so that they can mix their risks-and then, they are beginning to diversify.”