The Central Bank of Nigeria (CBN) has finalized arrangements to diversify its external reserves holdings by including the Chinese Renminbi (RMB) to the existing currency mix of United States Dollars (USD), the Euro (EUR) and the British Pound Sterling (GBP).

After due consultations with the Federal Government and other stakeholders in Nigeria, the CBN has gone ahead to engage the Chinese financial regulatory authorities with a view to building strategic and mutually beneficial relationships with key Chinese financial institutions.

Given the growing economic importance of China in the world, and the increasing trade flows between the two countries, the CBN initiative is expected to secure a strategic advantage for Nigeria in its economic and trade relationship with the People’s Republic of China.

In order to strengthen collaboration between the monetary authorities of both countries, the Central Bank of Nigeria (CBN) has signed a Memorandum of Understanding (MoU) with the People’s Bank of China (PBoC) to foster greater cooperation in various areas of central banking. Governor Zhou XiaoChuan signed on behalf of the PBoC while Governor Sanusi Lamido Sanusi signed on behalf of the CBN. The signing ceremony was witnessed Alhaji Aminu Wali, Nigeria’s Ambassador to the People’s Republic of China and Mr. Tunde Lemo, Deputy Governor (Operations) of the CBN.

This move by the CBN to diversify the nation’s external reserves is consistent with the Transformation Agenda of President Goodluck Ebele Jonathan GCFR, and has the full support of the Federal Government of Nigeria.

The governor of CBN Mallam Sanusi Lamido Sanusi, has explained that the choice of Chinese currency, Yuan, does not mean lack of confidence in Europe and America. He said China could no longer be ignored, stressing that it was the second largest economy in the world.

He said: “Confidence in China doesn’t mean lack of confidence in America. Europe and America will continue to be important parts of the world. Having said that, it will be almost living in a dream world to ignore China. It’s the second largest economy in the world and it’s well-managed.”

He disclosed that plans had been concluded to reach a target of holding 10 per cent of the foreign exchange reserves in Yuan as soon as possible, adding that the nation planned to start holding the Chinese currency next quarter. He added that the Yuan would inevitably become a reserve currency and that increased convertibility outside China had boosted its appeal.

The yuan was the biggest gainer in August among Asia’s 10 most-used currencies excluding the yen, having advanced 0.9 per cent versus the dollar as Standard & Poor’s downgrade of the US credit rating and a rout in global equities prompted investors to pull back from riskier assets.