ABCON Backs CBN Currency Swap Deal

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By Obinna Chima

The Association of Bureaux De Change Operators of Nigeria (ABCON) has once more applauded the $2.5 billion currency swap agreement between the Central Bank of Nigeria (CBN) and the People’s Bank of China (PBoC), saying the deal will promote naira’s sovereignty in Africa.

ABCON President, Alhaji Aminu Gwadabe, was quoted in a statement at the weekend, to have said the naira would benefit hugely from the deal given the rising influence of the Chinese Yuan in the international market.

He argued that the admittance of Yuan into the basket of International Monetary Fund (IMF) currencies and the naira/yuan swap deal would actualise the dream of naira sovereignty in Africa.

The naira has remained stable at both the official and parallel markets, as the CBN continues its weekly dollar interventions.

The naira which in February 2017 was exchanging at N520/$ in the parallel market now trades at N361/$, while rate at the official market remains N305.9/$.

The Yuan has equally made significant progress this year, appreciating 1.8 per cent against the dollar to become the world’s second-strongest Asian currency.

The ABCON boss also urged the CBN to consider diversifying dollar disbursement to BDCs with percentage amount of Yuan to meet the critical needs of their numerous clients travelling to China for personal and business purposes.

Gwadabe disclosed that the currency swap deal was part of the CBN’s plan to keep the naira stable and protect the foreign reserves domiciled in dollars.

He said the deal would provide adequate local currency liquidity for Nigerian and Chinese industrialists and reduce difficulties they face in searching for the greenback.

The ABCON said his members would equally benefit from the bilateral currency deal, given that a stable and strong naira was good for the economy and operators.

He added that increased use of Yuan in trade deals would also open a new business opportunity for BDC operators.

According to Gwadabe, ABCON will continually support CBN in achieving its exchange rate stability mandate and promoting economic growth through increased global partnerships and collaborations.

Gwadabe reiterated that the said swap deal would smoothen bilateral trade,  boost  investment,  and  protect the financial market in both countries as well as cut dollar demand by Nigerians entrepreneurs importing from China. All these, he said, would firm the value  of  the  local currency.

He therefore advised that to achieve the full gains of the deal, Nigeria has to take steps that boost its trade balance with China by raising the quality of its local products to make them more attractive and acceptable to the Chinese people.

“The deal will expand the BDCs capacity to handle new business transactions in Yuan. Besides, BDCs in both countries will have their transaction base expanded, including new opportunity to transact higher volume of Naira/Yuan in the export/import of equipment, raw materials and finished goods,” he said.

Gwadabe praised the CBN-led Bankers’ Committee for promising incentives to Nigerian businesses that import their machinery and goods with Yuan instead of dollar, adding that such act would deepen entrepreneurs’ interest in the swap deal.