Politics
Economist Urges Central Bank Of Nigeria To Prioritize China Currency Swap Agreement To Reduce Dollar Dependency
Economist Prof. Akpan Ekpo has advised the Central Bank of Nigeria (CBN) to prioritize the currency swap agreement with the Peoples Bank of China, aiming to reduce the country’s reliance on the US dollar for trade transactions.....KINDLY READ THE FULL STORY HERE▶
Prof. Ekpo, a former Director-General of the West African Institute for Financial and Economic Management (WAIFEM), shared this insight during an interview with the News Agency of Nigeria in Lagos….CONTINUE READING
He emphasized the importance of implementing the Nigeria-China currency swap agreement, encouraging Nigerian businesses engaged with China to transact in Chinese currency or the Nigerian Naira rather than relying on the US dollar or the Euro. By doing so, it would alleviate the pressure on the US dollar and the British pound.
Prof. Ekpo highlighted that several emerging markets, including the BRICS nations, are increasingly opting for bilateral currency trade agreements to reduce their dependence on foreign currencies like the US dollar, Euro, or Pound. Implementing the Chinese-Naira swap agreement could be highly beneficial for trade between the two countries.
He also connected the surge in inflation to exchange rate fluctuations, explaining that when businesspeople are uncertain about the future costs of buying dollars, they may raise prices. Thus, inflation can be influenced by the exchange rate as businesses expend more Naira to purchase dollars.
Notably, in May 2018, the CBN signed a currency swap agreement worth RMB 16 billion (approximately $2.5 billion) with the People’s Bank of China, designed to facilitate direct currency exchanges between businesses in both countries, providing liquidity in Naira to Chinese businesses and RMB liquidity to Nigerian businesses, enhancing transaction efficiency between the two nations.
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