China and Nigeria Renew $2bn Currency-Swap Deal

China and Nigeria have successfully renewed their $2 billion currency-swap agreement, a move aimed at boosting trade and stabilizing the naira amid ongoing economic challenges. The deal, which was originally signed in 2018, allows both countries to exchange their currencies directly, bypassing the need for third-party currencies like the US dollar in trade transactions. This initiative is expected to enhance bilateral trade, reduce currency volatility, and provide greater financial flexibility for businesses in both nations.

Under the terms of the renewed agreement, Nigeria will continue to use the Chinese yuan to settle trade and business transactions with China, while China can access the naira for transactions with Nigerian businesses. The deal is part of broader efforts to strengthen economic ties between the two countries, which have seen increasing trade volumes, particularly in sectors like manufacturing, infrastructure, and energy.

The currency-swap agreement is particularly significant given the challenges Nigeria faces with foreign exchange liquidity and the depreciation of the naira. By securing more favorable trade terms with China, Nigeria hopes to alleviate some pressure on its external reserves and reduce dependence on the US dollar for import and export activities.

Experts believe that the renewed deal will benefit Nigerian businesses by providing more affordable access to Chinese goods and services, which have become essential inputs for several sectors. Additionally, it could help stabilize the local currency by diversifying foreign exchange sources and increasing the availability of yuan within the Nigerian economy.

Both Nigerian and Chinese officials expressed optimism about the renewal of the currency-swap deal, stressing that it would deepen economic cooperation and promote stronger financial integration between the two nations. Analysts have also highlighted the potential for the agreement to serve as a model for other African countries looking to strengthen their trade relations with China and reduce reliance on traditional reserve currencies.

As the deal progresses, stakeholders will be closely monitoring its impact on Nigeria’s foreign exchange market and its broader economic outlook. By reinforcing its strategic ties with China, Nigeria aims to enhance its position in the global market and improve economic stability in the face of external pressures.