The rising trade tension between the United States and China, is benefitting Nigeria, as it is currently boosting the price of crude oil in the international market.
By the development, the country is not only increasing its stock of foreign exchange reserves, but also boosting the strength of the local currency, as confidence on the increasing buffers supports activities.
The President, Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, while speaking with finance journalists in Lagos, said since the beginning of April this year, oil prices have remained above $70 a barrel as the trade war rages.
According to him, the U.S. sanctions on Iran and Venezuela have also tightened the supply of crude oil at the international market and put upward pressure on oil prices.
Last week, U.S. had raised tariffs on $200 billion worth of Chinese imports to 25 per cent from previous rate of 10 per cent, pushing prices of affected consumer goods higher.
“The rising oil prices as a result of tension in the Persian Gulf and the increasing trade wars between two world economic giants – China and America, will help to take the naira to another level of stability.
“I advise the Federal Government and the Central Bank of Nigeria (CBN), to take advantage of the two situations by introducing what will support growth and development opportunities,” he said.
Gwadabe said with the exchange rate stability being witnessed in the market, the next target of the apex bank should be to have a single digit interest rate that would stimulate economic activities and business growth.
He noted that Russia and the Asian countries are already utilising their Yuan Swap agreement with China to strengthen their local currency, a strategy Nigeria is also expected to pursue.
The ABCON boss expects the CBN management to deepen currency SWAP pact with China, and diversify commodity exports to the United States in other to diversify foreign exchange earnings for the country.
“Other great areas to focus for diversifying our foreign exchange earnings include promoting Diaspora remittances for economic buffer and foreign reserves accretion as seen in India and United Arab Emirates where migration remittances have lifted their economies,” he said.