Expert urges CBN to prioritise currency swap agreement with China’s PBoC
An expert, Prof. Akpan Ekpo, has urged the Central Bank of Nigeria (CBN) to prioritize the currency swap agreement with the Peoples Bank of China (PBoC) in order to reduce reliance on the US dollar for trade.
Ekpo, a former Director-General of the West African Institute for Financial and Economic Management (WAIFEM), made this recommendation during a press briefing in Lagos.
He emphasised the need for Nigerians conducting business with China to use either the Chinese currency or the naira, rather than the dollar or euro, in order to alleviate pressure on these foreign currencies.
Ekpo also highlighted the global trend among emerging markets, such as the BRIC countries, to trade using bilateral currencies as a means of reducing dependence on major international currencies.
According to him, “This is the time to implement the Nigeria-China currency swap so that we don’t put all our eggs in one basket.
“So Nigerians who are dealing with China should deal with Chinese currency or with naira not with dollar or euro; that will reduce the pressure on dollar or pound.
“This is the time to take it very seriously; the Federal Government signed the agreement, it was done briefly then we didn’t know what happened again.
“If you look at the global trend, emerging markets by the BRICs are trying to trade with bilateral currency to downplay the importance of dollar, euro or pound because these currencies are not theirs and they can’t print them.
“So, if we can now implement the Chinese-naira swap, it will be very helpful for business trade.”
He called on the Nigerian government to take the currency swap agreement seriously and implement it as soon as possible.
Ekpo further linked the rising inflation in Nigeria to the exchange rate, explaining that if businesses have to spend more naira to purchase dollars without knowing the future cost, they will increase prices, leading to inflation.
“If any business man spends more naira to buy dollars and does not know what the cost will be the next time, he will jerk up the price.
“So inflation passed through the exchange rate will be automatic as business men continue to use more naira to buy dollars.”
The currency swap deal between the CBN and PBoC, valued at RMB 16 billion (approximately $2.5 billion), was signed in May 2018 by the former governors of both central banks. The agreement aims to facilitate direct currency exchange between Chinese and Nigerian businesses.
