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Nairaland Forum / Nairaland / General / Business / Nigeria Agrees Currency Swap With China To Shore Up Naira, Help Fund Deficit (704 Views)
How Nigeria Will Benefit From Currency Swap Deal With China / CBN Sells Another $250m To Prop Up Naira Value / Nigeria agrees currency swap with China to shore up naira, help fund deficit (2) (3) (4)
Nigeria Agrees Currency Swap With China To Shore Up Naira, Help Fund Deficit by austentero: 4:20pm On Apr 12, 2016 |
By Felix Onuah
BEIJING, April 12 (Reuters) - Nigeria on Tuesday
agreed a currency swap deal with China, officials
said, as it looks for ways to shore up its ailing
currency and fund a record budget deficit,
possibly by issuing yuan-denominated bonds in
China.
The West African nation is facing its worst
economic crisis in decades as sinking oil prices
eat into its foreign reserves and the naira
weakens against other currencies.
Nigeria has been for months looking for sources
to help plug a projected 2016 deficit of 2.2
trillion naira ($11.1 billion) as President
Muhammadu Buhari plans to triple capital
spending.
During Buhari's visit to Beijing, the Industrial and
Commercial Bank of China Ltd (ICBC) , the
world's biggest lender, and Nigeria's central
bank signed a deal on yuan transactions.
"It means that the renminbi (yuan) is free to
flow among different banks in Nigeria, and the
renminbi has been included in the foreign
exchange reserves of Nigeria," Lin Songtian,
director general of the African affairs department
of China's foreign ministry, told reporters.
The agreement was reached following a meeting
between Buhari and Chinese President Xi Jinping.
The move comes after Finance Minister Kemi
Adeosun said on Saturday that Nigeria was
looking at panda bonds - yuan-denominated
bonds sold by overseas entities on the mainland
-saying they that would be cheaper than
Eurobonds.
Nigeria's central bank has said it plans to
diversify its foreign exchange reserves away from
the dollar by switching a stockpile into yuan. It
converted up to a tenth of its reserves into yuan
five years ago.
Lin said a framework on currency swaps has
been agreed with Nigeria, making it easier to
settle trade deals in yuan. China has signed
currency swap deals with countries ranging from
Kazakhstan to Argentina as it promotes wider
use of its yuan.
Beijing also signed agreements to develop
infrastructure in Nigeria, part of a drive to deepen
its ties with Africa.
ICBC signed a $2 billion loan deal with Dangote
group , the company owned by Africa's richest
man, Aliko Dangote, to fund two cement plans it
plans, he told Reuters.
China's official Xinhua news agency cited
President Xi as telling Buhari that there was
huge potential for economic cooperation, naming
oil refining and mining.
In a speech to business leaders, Buhari said both
countries wanted to work together in the areas
of agriculture, fishing and the manufacturing of
cars, construction materials and textiles.
Aly Khan Satchu, a portfolio manager at Rich
Management, said the deal would pave the way
for panda bonds but this would not be enough to
ease pressure on the naira.
Buhari has rejected calls to devalue the currency.
"Nigerian FX policy remains the elephant in the
room and China or a panda bond is not going to
be enough to stop what will eventually become a
tsunami of a devaluation," he said. ($1 =
198.8000 naira) (Reporting by Ben Blanchard
and Chijioke Ohuocha; Writing by Ulf Laessing;
Editing by Hugh Lawson) http://mobile.reuters.com/article/idUSL3N17F3AG?rpc=401& |
Re: Nigeria Agrees Currency Swap With China To Shore Up Naira, Help Fund Deficit by chriskosherbal(m): 4:22pm On Apr 12, 2016 |
We pray all these leads to economic growth and development. |
Re: Nigeria Agrees Currency Swap With China To Shore Up Naira, Help Fund Deficit by Freshboi: 4:25pm On Apr 12, 2016 |
Just in case |
Re: Nigeria Agrees Currency Swap With China To Shore Up Naira, Help Fund Deficit by hopeforcharles(m): 4:27pm On Apr 12, 2016 |
Interesting news let's watch how Americas reacts to this news, meanwhile if it will help us, I am in. |
Re: Nigeria Agrees Currency Swap With China To Shore Up Naira, Help Fund Deficit by Sunnymatey(m): 6:29pm On Apr 12, 2016 |
It's the right step, we have for long depended on the europian countries with litle or nothing to show. Ties with Asia might just be more rewarding. Waiting to see the outcome. |
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