China and Nigeria have extended/renewed their currency swap agreement with 15 billion yuan—which is approximately N3.28 trillion naira or $2.09 billion—in a bid to strengthen trade and financial ties between both countries.
This currency swap deal allows both countries to trade bilaterally in their local currencies—China’s yuan and Nigeria’s naira—for the purpose of reducing reliance on third currency like the US dollar, Euro and Pounds.
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The currency deal involves providing naira liquidity to Chinese businesses and yuan liquidity to Nigerian businesses, in order to reduce both parties’ dependence on the dollar for transactions.
The renewed agreement is fifteen (15) billion Chinese’s yuan—which is approximately N3.28 trillion Nigerian’s naira or $2.09 billion in US-dollar. The agreement will hold for three years, with the option to renew again if both nations have mutual agree.
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This move is expected to make bilateral trade between the two countries more efficient by reducing importation and exportation transaction costs and encouraging the use of their respective local currencies in the international market.
China is one of the Nigeria’s largest trading partners. Trades between both countries have a record of $22.6 billion in 2023. This indicates an increase of 33% compared to the previous year.
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The currency swap is part of a broader effort by both nations to promote regional economic cooperation. By reducing reliance on foreign currencies, the agreement could help stabilise local economies and encourage further investment.
This renewal reflects a continued commitment to boosting economic ties and facilitating easier trade and financial exchanges between China and Nigeria.
