Naira strengthens after ‘yuan swap’

The naira firmed on Wednesday following the expected Nigeria-China yuan swap announced by the Central Bank of Nigeria (CBN) over the week.

Naira firmed from its position around 322 to 317, as bureau de change (BDC) operators claimed they were already seeing less pressure for dollar demand.

Speaking to TheCable from Abuja, a BDC agent said major traders were not trading for dollars due to the impending yuan swap.

“Here in Abuja, we are buying the dollar at 315 and selling at 317 for now. Buyers are buying fewer than they were doing just a week ago,” he said.

“They said CBN did one Yuan deal, and since then demand has reduced. I don’t know much about the deal, but that is what is affecting sales.”

Another operator at Alade Market, Lagos, confirmed that the naira had appreciated, although he did not tie it to the Yuan deal.

“We are buying 317 and selling 320,” he said, against 320 and 322 respectively a few days earlier.

CBN already said it was consummating a deal to be the remnibi (Yuan) trading hub in west Africa, reducing pressure on the demand for dollar for international trade.

Speaking about the deal in Washington, Godwin Emefiele, the CBN governor, said it was expected to erode the demand for dollar for Chinese transactions.

“China has appointed South Africa as its trading hub for Remnibi transactions in the south African region, has appointed Kenya as its trading hub for east and central Africa,” he said.

“And Nigeria, the mandate that we signed is for us to be appointed as the trading hub in the West African sub region. In all, we expect that it is going to be mutually beneficial.”