Currency Swap Deal: Importers Heave a Sigh Of Relief Over Implementation By CBN

 By Elizabeth Chukwuma

At long last President Muhammadu Buhari  has given the go ahead to Godwin Emefiele , the governor of the Central Bank of Nigeria, CBN, to go ahead with the implementation of the Currency Swap deal with  China instead of using the United States,  US, dollar  to conduct  transactions between Nigerian businessmen, particulars and their  Chinesese suppliers including investors from both countries.

T investigation by The Value News , reveal thathere had been pressures  on the CBN and the National Economic , NEC, to advice the government , over the years to advice the government to cue into  the Currency swap  deal with the Chinese currency Yuan as many other countries have done  in their transactions  with them .

 The pressure became more pronounced in 2017, as over  70 percent  of the country’s imports  came from  China, India and other Asian countries while 12 percent only  came from the United  States and Europe.  The Chinese based Nigerian  importers  were said to have piled up pressure on the CBN , using their contacts in the Presidency and the Federal Ministry of Finance , to allow them use the Yuan ,  in their  transactions with their Chinese suppliers instead of the US dollar. 

Their worry was that they are spending  too much money to import goods from China, by using the US dollar , going by the official exchange rate of N360 .00 to a dollar. When the Value News visited the Tincan Island port  last Wednesday  and had opportunity of discussing with some of the  freight Forwarder and agents, they welcomed the government decision to go ahead with the implementation of the Currency  Swap  Deal with China as a way of reviving the nation’s economy. At  present, N47.00 exchanges for one  Chinese Yuan in the international currency market.

Godwin Emefiele: CBN Governor

The  currency swap  deal,  which is a three year  tenor allows both the CBN,  and  Peoples Bank of China, PBoC,   to swap a maximum  amount  of CNY 15 billion for N720 million. This amount,  according to  market analysts  is equivalent to $2.5 million using an exchange rate of N305 to a dollar, which  was what  the dollar was   sold to importers in the inter Bank  foreign Exchange market.

It was learnt that the Nigerian Customs Service, NCS , has been given the nod by the CBN , to do their calculation  on  duties on imports from China based on the current exchange rate of N47.00 to the Chinese Yuan . Note that as provided  in the Currency Swap agreement , the deal was precisely  to ”finance  trade and investment  between China and Nigeria only as well as maintain  the country’s financial market stability  and facilitate other  connected  purposes  as agreed upon by both the African and the Asian countries.

 Indeed,  the decision by the government to adopt the Yuan in transactions with Chinese suppliers and investors , may have sent jitters down the spine  of currency dealers in the  nation’s black market  who fear losing their business to the Chines yuan dealers. Many of them  over the years have been hoarding  US, dollar and other foreign currencies  to make huge gains with the continued devaluation of the naira.

 A  Currency dealer, who spoke to The Value News  described   it as  a rumour  that the  CBN , has begun to  implement the Currency Swap Deal with China, noting that they would be the most hard hit.  Note that  many approved Commercial Banks   in the country  will flood the Chinese market to have Representatives office. First Bank Nig. Plc, may have read the mindset of  the government economic policy makers  to influnce  the Katsina  state born Nigeria President to cue into the Currency Swap deal with China, if he eventually secures a second term in office that it was said to have quickly opened a functional Representative  office in the Asian country to help  importers using the Bank in the  transfer of funds to the Chinese suppliers.

Buhari may have shocked Donald Trump, his counterpart in the US, with the endorsement of the Currency Swap deal with China which would further  see  the dollar crash of the dollar  in the international Currency market. recall  that the  American government  has used threats of not buying  theNigerian oil  to force the government to drop the idea of the Currency swap deal with China and  still be using  the dollar in  transactions with the oversea Customers including those of them  in China.  .

The endorsement of the  Currency Swap  deal with China by the CBN, is coming barely  one week after the President , came back from  his private trip to the United Kingdom., UK.  The  deal  with China, may have informed the reason why he said he would provide effective leadership to improve the standard of living of Nigerians in the next four years and beyond.

  Market analysts believe  that the CBN , may have finally found a solution to  the persistent inflationary trend in the country.  They are optimistic that ”inflation will go down drastically as the price of imports from China, particular, Computers and mobile phones  , will drop significantly. Many are looking forward to buying  the  N80,00 .00 Techno phone,  between N15,000.00 and N20,000.00 , with the Currency swap deal with China in the next couple of years.      

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