Prof. Akpan Ekpo, an economist, has encouraged the Central Bank of Nigeria (CBN) to take the currency swap arrangement with the Peoples Bank of China (PBoC) seriously in order to lessen the country’s dependency on the dollar for commerce.
The suggestion was given by Ekpo, a former director-general of the West African Institute for Financial and Economic Management (WAIFEM), to the News Agency of Nigeria (NAN) on Saturday in Lagos.
“Now is the time to implement the currency swap between Nigeria and China so that we don’t put all of our financial eggs in one basket.
The pressure on the dollar and the pound will be lessened if Nigerians doing business with China use Chinese currency or the naira rather than the USD or the euro.
“Now is the time to take it seriously; the Federal Government signed the deal, but only after a brief period during which we were left in the dark about what had transpired.
“If you look at the overall trend, developing markets in the Brics are attempting to trade in bilateral currencies to minimise the significance of the dollar, euro, and pound because these currencies are not their own and they cannot print them.
Therefore, it will be very beneficial for corporate commerce if the Chinese-Naira swap can now be put into effect.
According to the expert, if a businessman spends more naira to acquire dollars without knowing what the price would be the following time, he will raise the price.
Consequently, as long as businessmen continue to utilise more naira to purchase dollars, inflation transferred through the exchange rate will remain automatic.
The Renminbi (RMB) 16 billion (about $2.5 billion) currency swap agreement between the CBN and PBoC was inked in May 2018, according to NAN.
Godwin Emefiele, the CBN Governor who has been placed on leave, and Yi Gang, the previous PBoC Governor, signed the swap agreement.
The agreement was made in order to give Nigerian and Chinese industrialists and other companies immediate access to their own currencies.
According to the top bank, the deal will give Nigerian businesses access to RMB liquidity while also giving Chinese businesses access to naira liquidity, enhancing the volume, ease, and speed of transactions between the two nations.(NAN)
