The Central Bank of Nigeria (CBN) has estimated its first auction of the Chinese Yuan Renminbi (CNY) at N3.6 billion, an exchange rate between N49 and N51 per Yuan.
The currency swap deal was valued at 16 billion Yuan (about N720 billion), with expectations that the demand for US dollar by Nigerians importing goods from China will reduce and consequently strengthen the value of the naira.
Data made available by the CBN showed that 69.8 million Yuan was sold to traders seeking foreign exchange in the agricultural and raw material sector.
According to Isaac Okoroafor, acting director, coporate communications at CBN, the Chinese currency was made available only to customers with Renminbi denominated letters of credit for agriculture as well as raw materials and machinery.
He said the exercise was conducted through a combination of spot and 15-day settlement, attributing its success to “relative stability in the foreign exchange market, the continued intervention of CBN, and the sustained increase in crude oil prices in the international market”.
The CBN spokesman said authorised dealers would, however, be allowed to earn 50 kobo on customers’ bids.
On May 3, Nigeria signed a bilateral currency swap agreement with the People’s Bank of China (PBoC) worth about $2.5billion.
The Yuan auction which kicked off on July 20 is part of the apex bank’s special secondary market intervention sales.
It was executed with the interbank retail secondary market intervention sales worth $340.5 million.
The currency sway deal was primarily targeted at facilitating trade between the two countries and boosting their reserves.
Source: The Cable