President of the Association of Bureau De Change, BDC, operators of Nigeria, Aminu Gwadabe, has applauded Nigeria’s plan to increase transactions in Chinese currency, the Yuan, saying the move has already given more bite to the Naira against the United States dollar.
Gwadabe said that since the announcement of the currency swap by President Muhammadu Buhari on his working visit to China, the naira had appreciated by 10 naira against the dollar. His position tallies with the position of some analysts who postulated that the shift to Yuan in transaction would reduce the relevance of the dollar in exchange between Nigerian business people and their trading partners overseas especially in the Asian flank.
This, they contend would reduce the pressure on the naira due to reduced demand for the dollar.
Gwadabe noted that the dollar was now changing for 310 as against the former rate of 320 and predicted that the price of dollar will continue to fall once the policy is in force.
He said: “You know more than 50 percent of foreign businesses in Nigeria is with China and before now, Nigerians doing business in China have to change their money to dollar, then from dollar to yuan.
“You can all testify to the number of made in China things in the country. So if small and large businesses can convert straight to yuan, it’s better,” he told reporters.
The Industrial and Commercial Bank of China Ltd, ICBC and the Central Bank of Nigeria, CBN, signed a deal on yuan transactions, as a way to resuscitate the current currency slump in Nigeria.
The direct implication is that the yuan will flow freely around Nigerian banks and will even be included in the country’s foreign exchange reserves.
Some African nation namely Ghana, South Africa and Zimbabwe have integrated the yuan currency into their financial markets since 2014.
Nigeria has had a growing trading relationship with China. The new currency deal will bolster bilateral trade between both nations aside forcing the US dollar to lose a little potency over the naira.
