The Central Bank of Nigeria (CBN), will next month begin to auction the Chinese yuan at an exchange rate to be set via book building, an official said on Thursday.
This is said to be an attempt to reduce the country’s reliance on the U.S. currency for imports from Asia.
CBN last month signed a $2.5 billion currency swap agreement with the People’s Bank of China to facilitate trade between the two countries and enhance foreign reserve management.
China is one of Nigeria’s trading partners and the Federal Government wants to finance deals in the local currency of trade to reduce its reliance on the dollar. More than a fifth of its imports of N2.52 trillion was from China in the first quarter, according to the National Bureau of Statistics.
Nigeria is Africa’s biggest country in terms of population but it has limited manufacturing capacity. As a result, it imports most of what it consumes and markets are full of Chinese products.
The CBN said in a circular on Thursday that the auctions will hold every two weeks.
Agency Report