China and Nigeria have extended a 15 billion yuan (approx. $2 billion) currency swap agreement, aimed at facilitating seamless trade and investment between both nations.
In a Friday statement, the People’s Bank of China (PBOC) confirmed that the three-year facility—renewable upon mutual agreement—will strengthen financial cooperation and expand the use of the yuan and naira, reducing reliance on the US dollar and cutting transaction costs.
The currency swap which was originally signed in 2018, was aimed at addressing liquidity challenges for businesses in both countries and facilitating trade in their respective currencies.
At the time, it allowed for the exchange of up to 15 billion Chinese yuan (CNY) for 720 billion Nigerian naira (NGN), equivalent to $2.5 billion at an exchange rate of NGN305 to $1.
From the agreement, the swap is meant to rationalize trade transactions by getting rid of the need for US dollars as an intermediary currency.
The deal provides liquidity in naira for Chinese businesses operating in Nigeria and in yuan for Nigerian firms trading in China. The system is meant to facilitate seamless transactions, support bilateral investments, and enhance market efficiency.