Nigeria has renewed its bilateral currency swap agreement with China, a move that underscores the deepening financial and economic cooperation between the two nations.

The Central Bank of Nigeria (CBN) and the People’s Bank of China (PBOC) announced the renewal of this arrangement on Friday, with the agreement amounting to 3.28 trillion Nigerian naira, equivalent to approximately 15 billion yuan or 2.09 billion U.S. dollars. This renewal signifies a continued commitment to fostering stronger ties and facilitating smoother economic exchanges.

The currency swap agreement, which is valid for a period of three years, retains the option for further renewal based on mutual consent between the two central banks. This mechanism has proven beneficial for both nations, providing a framework for financial collaboration that simplifies transactions involving the Nigerian naira and the Chinese yuan. By renewing this agreement, both countries aim to expand the use of their respective currencies in international trade, reducing dependency on third-party currencies like the U.S. dollar.

According to the statement released by the People’s Bank of China, the renewed arrangement is expected to significantly bolster bilateral trade and investment between the two economies. The currency swap provides businesses in both countries with greater ease of access to local currencies, thereby reducing transaction costs and streamlining trade processes. This move aligns with the broader objective of enhancing economic cooperation between China and Nigeria, two countries that share strong commercial and diplomatic relations.

Furthermore, the agreement reflects a strategic effort to encourage the internationalisation of the Chinese yuan while simultaneously promoting the Nigerian naira’s stability in global financial markets. This collaboration is part of a larger trend where countries are exploring alternatives to traditional trade settlement methods, thereby fostering a more inclusive and diversified global financial system. Through initiatives like this, both nations aim to create a conducive environment for sustainable economic growth and development. (BusinessDay)