Nigeria, China renew currency swap deal

China’s central bank has announced the renewal of its bilateral currency swap agreement with the Central Bank of Nigeria.

The agreement, valued at 15 billion yuan (approximately $2.09 billion USD or N3.28 trillion), is valid for three years and can be renewed upon mutual consent.

The development was confirmed by the Special Adviser Information and Strategy to President Bola Tinubu, Bayo Onanuga, in a statement on Friday.

This renewal aims to strengthen financial cooperation between China and Nigeria, expand the use of both currencies, and facilitate bilateral trade and investment.

Originally signed in 2018, the currency swap agreement allows for the direct exchange of the Chinese yuan and Nigerian naira, reducing reliance on the US dollar and lowering transaction costs in trade between the two nations.

The renewal comes as Nigeria seeks to stabilize its currency, the naira, which has faced significant depreciation following exchange rate liberalization earlier in 2024.

By increasing access to yuan, the currency swap is expected to reduce pressure on Nigeria’s dollar reserves and bolster its trade position with China.

In September 2024, China and Nigeria agreed to encourage flexible and diverse regional monetary and financial cooperation, such as local currency swaps, to promote bilateral trade.

They also committed to international cooperation on financial intelligence against money laundering and terrorist financing and to support Nigeria’s efforts to maintain order in financial and foreign exchange markets.