Economist Calls on CBN to Prioritize Currency Swap Agreement with China

Former Director-General of the West African Institute for Financial and Economic Management (WAIFEM), Mr. Ekpo, has strongly advised Nigeria to take immediate action on the Nigeria-China currency swap agreement to diversify its currency reliance. Mr. Ekpo offered this counsel in Lagos during an interview on Saturday.....KINDLY READ THE FULL STORY HERE▶

He emphasized the urgency of implementing the currency swap agreement between Nigeria and China to reduce the nation’s overdependence on a single currency….CONTINUE READING

He advocated for Nigerians involved in trade with China to utilize Chinese currency or the Nigerian Naira instead of the US Dollar or Euro, as this shift would alleviate the stress on the US Dollar and the British Pound.

Mr. Ekpo highlighted the current global trend, where emerging markets like BRICS nations are increasingly opting for bilateral currency trading arrangements to reduce their dependency on foreign currencies like the US Dollar, Euro, or Pound.

He stressed the potential benefits of swiftly executing the Chinese-Naira swap agreement to enhance trade between the two countries.

Additionally, Mr. Ekpo drew a connection between the rising inflation rate and fluctuations in the exchange rate. He explained that when businesspeople must spend more Naira to purchase dollars without knowing the future costs, they may raise prices.

Consequently, inflation can be driven by exchange rate fluctuations as businesses expend more Naira to acquire dollars.

It is worth noting that in May 2018, the Central Bank of Nigeria (CBN) signed a currency swap agreement valued at RMB 16 billion (approximately $2.5 billion) with the People’s Bank of China.

This agreement aimed to facilitate direct currency exchanges between industrialists and other businesses in both countries, providing Naira liquidity to Chinese businesses and RMB liquidity to Nigerian businesses, thus enhancing the efficiency and volume of transactions between the two nations.