Nigeria, China currency swap forces US dollar rate down

LAGOS - Nigeria's plan to increase the availability of renminbi (yuan) has already favored the Naira against the US dollar, a top official with the Association of Bureau De Change Operators of Nigeria said Sunday.

Aminu Gwadabe, President of the Association disclosed this to reporters in Abuja, saying since the announcement, the Naira had appreciated by 10 naira against the dollar.

The Industrial and Commercial Bank of China Ltd and the Central Bank of Nigeria signed a deal on yuan transactions, as a way to resuscitate the current currency slump in Nigeria.

The deal meant the yuan will flow freely around Nigerian banks and will even be included in the country's foreign exchange reserves.

Since 2014 when yuan was recognized as a likely global reserve currency, Ghana, South Africa and Zimbabwe have integrated the currency into their financial markets.

Gwadabe said the dollar was now changing for 310 as against the former rate of 320 and predicted that once the policy is in force, the price of dollar will continue to fall.

He told reporters that this new policy will help the informal payment sector.

"You know more than 50 percent of foreign businesses in Nigeria is with China and before now, Nigerians doing business in China have to change their money to dollar, then from dollar to yuan," he added.

"You can all testify to the number of made in China things in the country. So if small and large businesses can convert straight to yuan, it's better," he told reporters.

He urged the CBN to monitor the development closely for effective implementation of the policy.