Exploring the Impact of China-Nigeria Currency Swap Deal on Global Markets
China and Nigeria have renewed their 15 billion yuan ($2 billion) currency swap agreement, aiming to strengthen financial cooperation and boost bilateral trade and investment.
The People’s Bank of China announced that the agreement is valid for three years and can be renewed upon mutual consent.
Originally established in April 2018, the currency swap arrangement allows for the direct exchange of the Chinese yuan and Nigerian naira, reducing reliance on the U.S. dollar and lowering transaction costs in trade between the two nations.
This mechanism provides naira liquidity for Chinese businesses operating in Nigeria and yuan liquidity for Nigerian firms trading in China.
China is Nigeria’s largest trading partner, with Nigeria importing $11.2 billion in goods and services from China and exporting $2.4 billion to China in 2023.
The renewal of the currency swap agreement is expected to further facilitate seamless transactions, support bilateral investments, and enhance market efficiency between the two countries.
This development comes amid broader global discussions on reducing dependence on the U.S. dollar for international trade.
Notably, U.S. President-elect Donald Trump has expressed concerns over countries backing alternative currencies to replace the U.S. dollar, warning of potential trade tariffs against such nations.
The Central Bank of Nigeria has not yet commented on the renewal of the currency swap agreement.
However, the continuation of this arrangement underscores the deepening economic ties between China and Nigeria, prioritizing direct currency exchanges to promote cross-border trade and investment.