The Central Bank of Nigeria (CBN) and Peoples Bank of China (PBoC) have agreed on a currency swap worth $2.5 billion to reduce their reliance on the U.S. dollar in bilateral trade.
CBN Governor Godwin Emefiele led Nigerian officials, while the PBoC governor, Yi Gang, led the Chinese team to the signing ceremony in Beijing last week.
The agreement is aimed at providing sufficient local currency liquidity for Nigerian and Chinese industrialists and other businesses and to reduce difficulties as they search for a third currency.
The deal, purely an exchange of currencies, also will make it easier for Chinese manufacturers seeking to buy raw materials from Nigeria to obtain naira, the Nigerian currency, from Chinese banks to pay for their imports.
According to Nigerian economist Yusha’u Aminu, excluding the United States in the agreement would help to lower the exchange rates between both countries.