Following concerns raised by the players in the Nigerian business environment regarding the currency swap between Nigeria and China, an economic analyst, Frank Elle, has attempted to shed some light on it.
Elle noted that transactions between Nigerian and Chinese business men are currently quoted men and currently quoted in dollars, due to the fact the CBN currently has not built up enough reserve for the Chinese Renminbi (or Yuan).
According to Elle who spoke with The Tide in an interview at the weekend in Port Harcourt, “the CBN has not built up enough Chinese Yuan because we don’t sell much to them; so Nigerian businessmen who want to do business with China would get their prices in dollars”. He explained that if the currency swap is successful, then the pressure that carne with the demand for dollars would reduce.
Elle observed that the Nigerian business man would have to buy dollars with which he would pay for his purchases, “but with the currency swap transactions between Nigeria and China would now be done in the respective currencies of the two countries”.
Additionally, he stated, the currency swap deal would assist businessmen by reducing difficulties in their search for third currencies as it would provide Naira liquidity to Chinese businessmen and vice versa.
He further said that the deal would benefit small and medium enterprises, especially those in manufacturing and export or in the importation of raw materials, spare parts and machinery to enhance their business.
He noted, however with regret, that this deal would favour China more as business deals between the two countries were lop sided, in favour of China.
He said, “unfortunately we buy more from China than they buy from US” and warned that the effect would be a weakened domestic manufacturing capacity and trade unbalance for Nigeria.

Toney Nria-Dappa