NIGERIA'S CURRENCY DEAL SWAP WITH CHINA STALLS

Two years after the administration of President Muhammadu Buhari had advanced talks with China for a currency swap deal, the scheme has failed to take off.

According to the guardian reports, after a meeting with Chinese President Xi Jinping in Beijing two years ago, the Industrial and Commercial Bank of China Ltd (ICBC), the world’s biggest lender, and Nigeria’s Central Bank signed a deal on yuan transactions. But the plan was trailed by a mix of optimism, pessimism and caution from stakeholders and experts, citing previous experiences of similar efforts.

For analysts at Afrinvest, the strong participation of private investors in the FDI and loan agreements sealed, sequel to the move, would improve the implementation rate relative to past bi-lateral investment engagements and could potentially boost capital importation from China and domestic infrastructure investment.

While awaiting official clarifications, we think the ‘currency deal’ could either be a conventional swap, in which the CBN and China would exchange a stock of their currencies at a predetermined exchange rate to be reversed at maturity of the swap line or a move by China to boost yuan-liquidity in Nigerian banks as a trade and investment currency in exchange for future assets transfer (probably oil) to China to liquidate the swap line,” the analysts said.