Currency Swap: CBN Sells 3.69bn Yuan In Three Years

The Central Bank of Nigeria has said it sold 3.69 billion yuan from the inception of the currency swap deal with China to June this year.

The apex bank disclosed this in its ‘Financial markets department 2021 half-year activity report’.

The CBN had in May 2018 signed the Bilateral Currency Swap Agreement with the People’s Bank of China to facilitate trade between the two countries and enhance foreign reserve management.

The report said, “The Bilateral Currency Swap Agreement between the CBN and the People’s Bank of China, which commenced in July 2018, expired in April 2021 and was subsequently renewed.

“In the review period, 13 auctions were conducted and renminbi worth CNY1.22bn was sold. Similarly, in 13 auctions in the corresponding period of 2020, renminbi worth CNY294.09m was sold. The total sum of CNY3.69bn had been sold since inception to end-June 2021.”

The agreement between both countries is aimed at providing naira liquidity to Chinese businesses and RMB liquidity to Nigerian businesses respectively, thereby improving the speed, convenience and volume of transactions between the two countries.

The agreement is also aimed at reducing the difficulties encountered in the search for third currencies, according to the CBN.

It is also aimed at assisting both countries in their foreign exchange reserves management, enhance financial stability and promote broader economic cooperation between them.