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CBN may not release $2.5bn currency swap framework this week as promised

Though the Central Bank of Nigeria (CBN), last week assured that it will before the end of this week, release framework for the effective implementation of the sealed $2.5bn currency swap deal with China Central Bank, checks at the head office Abuja showed that the release may have been postponed indefinitely without any explanation.

The CBN Governor, Mr. Godwin Emefiele, confirmed this while speaking to journalists shortly after the two-day Monetary Policy Committee (MPC) meeting held at the apex bank’s headquarters in Abuja last week.

The currency swap agreement was signed on April 27, after two years of painstaking negotiations between the CBN and the People’s Bank of China. The transaction, which is valued at Remnibi 16 billion, or the equivalent of about $2.5bn, is aimed at providing adequate local currency liquidity to Nigerian and Chinese industrialists and other businesses.

Emefiele dismissed fears that the agreement would have any negative effect on the Nigerian economy. He argued that the pact would reduce the pressure encountered in the search for third currencies in the execution of business transactions between Nigerian and Chinese industrialists. Among other benefits, he said the agreement would provide naira liquidity to Chinese businesses and provide Remnibi liquidity to Nigerian enterprises.

This, he noted, would help to improve the speed, convenience and volume of transactions between the two countries. Emefiele explained that already, the apex bank had shortlisted two lenders as settlement banks for the implementation of the currency swap deal. The banks are Stanbic IBTC and Standard Chartered Bank.

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