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New Chinese currency swap deal to cut down transaction cost, ease importation—CBN

The Central Bank of Nigeria (CBN) has thrown more lights on the multiplier effects of the currency swap deal it recently consummated with the Peoples Bank of China (PBC), saying the new arrangements will among other things, cut down import transaction costs and ease forex access using Renminbi (RMB) instead of dollar.

The apex bank who addressed the press after its Bankers Committee meeting held in Lagos, said the swap deal will make importation of some specific goods from China seamless as the $2.5 billion currency swap pact will drive more import deals.

Bankers’ Committee believed that importers of Chinese equipment, machineries and goods are expected to obtain invoices in RMB instead of dollar for settlement which would ultimately cut down transaction cost and make importation cheaper for Nigerians playing in that market segment.

Apart from making Chinese imports easy and hitch-free, the Committe noted that the arrangement would go a long way to strengthen the nation’s external reserve which is currently put at $48 billion.

Explaining more, a member of the Bankers’ Committee and the Chief Executive, Stanbic IBTC Bank, Demola Sogunle, averred that “CBN and the Bankers Committee are to start encouraging importers to receive invoices in Renminbi instead of dollars”.

“One of the incentives will be that a percentage spread will be given to any importer that is bringing a Renminbi invoice for settlement instead of bringing a dollar invoice.

“If you bring Renminbi invoice, the benefit is that it is going to be cheaper for the importer in coming to CBN to get foreign currency which, in this case, will be Renminbi.

“The importer will actually bring lesser amount of naira.

If he goes ahead to buy with the same supplier based in China and collect invoice in dollars, it will cost the importer slightly more in terms of the naira amount he will use to get the foreign currency.

Sogunle revealed that “We have got almost $48 billion in external reserve, because we trade a lot with China. If we are able to continue to bring in machinery and equipment, without depleting our dollar reserve, the external reserve will not be under threat”.

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