Central bank of Nigeria has reached an agreement with chinese.Nigerian will be buying chinese product with yuan.do you think is a good or bad decision..

Any time from now Nigrians will no longer buy chinese product with dollars.rather chinese yuan will be used. Do you think is a good or bad news

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Updated: June 21, 2019 — 10:23 pm

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Christopher Gwaze

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  1. Excuse me if you are a Chinese but that deal with Nigeria is one-sided on the advantage of China. It looks like China will conquer the world economy sooner or later.

  2. Basically what happened is that Nigeria and China through both country’s apex banks went into a bilateral currency swap agreement.

    A bilateral currency swap agreement is a deal done for the purpose of maintaining an appropriate level of balance of payments for meeting short-term deficiency in foreign exchange. This means that any two countries who enter into such deals will agree on a certain fixed currency exchange rate for a specified period of time in executing bilateral trade deals between them.

    The deal between Nigeria and China is an agreement on a three year tenor which allows both the central bank of Nigeria (CBN) and people’s Bank of China (PBOC) to swap a maximum amount of Yuan 15 Billion for NG 720 Billion. This amount is equivalent to US$2.5 Billion using an exchange rate of NGN305 which the deal was signed on.

    As provided in the Regulations, the Currency Swap Agreement was purposely executed to:

    finance trade and investment between China and Nigeria;
    maintain financial market stability; and
    facilitate other connected purposes as may be agreed upon by both countries.

    Coming back to your question, I think yes, it’s a great deal for both countries. Asides from the fact that the deal gives room for a stable exchange rate, it also allows Nigeria to deal with China on a lower fixed currency exchange rate given the overwhelming amount of products being imported to Nigeria from China and the constant  fluctuations of exchange rate.

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