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Nigeria Renews ₦3.2 Trillion Currency Swap with China, Moving Away from Dollar Dependence

Published by Tope Fakinlede on December 28th, 2024.

Nigeria Renews ₦3.2 Trillion Currency Swap with China, Moving Away from Dollar Dependence

Nigeria has extended its bilateral currency swap agreement with China, reinforcing the growing financial ties between the two nations.

The Central Bank of Nigeria (CBN) and the People’s Bank of China (PBOC) announced the renewal on Friday, with the agreement valued at ₦3.28 trillion, or approximately 15 billion yuan (around 2.09 billion U.S. dollars).

This renewal highlights both countries’ commitment to enhancing economic cooperation and facilitating smoother transactions. The new agreement will last for three years, with the possibility of renewal upon mutual consent.

This currency swap mechanism, which facilitates transactions in Nigerian naira and Chinese yuan, aims to minimize reliance on third-party currencies, particularly the U.S. dollar. It has already proven advantageous in simplifying trade between the two nations.

According to the People’s Bank of China, the renewed deal is expected to boost bilateral trade and investment, allowing businesses in both countries easier access to local currencies, thus reducing transaction costs and enhancing trade efficiency.

This agreement is part of a broader strategy to promote the international use of the Chinese yuan while also stabilizing the Nigerian naira in global markets. The move reflects the growing trend among nations to explore alternatives to traditional trade settlements, fostering a more diversified global financial system.

Both China and Nigeria aim to create an environment conducive to long-term economic growth and development through such collaborations.