An economist with the Port Harcourt Polytechnic, Obed Chimele has applauded the Federal Government on the new currency swap deal between China and Nigeria.
Chimele noted in a chat with The Tide, weekend in Port Harcourt, that the new deal portends that the dollar would no longer be used for all import and export translation between the countries.
He explained that the currency swap, while stabilizing the financial market, would also improve trade relations between the two countries.
According to him, the swap, if successfully implemented, would give Nigeria the impetus to successfully export crude oil directly to China, using the Yuan, the Chinese currency, rather than the dollar, which often has to be done through third parties with their attendant costs.
“The currency swap, if it is successful, would improve trade between Nigeria and China. We would now do business with China using the Chinese currency.
“Since Nigeria and China would be transacting business with the Yuan, demand for dollars would reduce, there’ll be no more third party costs and it would also enhance transaction flexibility between Nigeria and China. China would also do business with Nigeria using the naira, which will help strengthen the Nigerian currency and in a way stabilise the economy”, he said.
The economist further added that some of the benefits of the currency swap include technical assistance, industralisation, business and job opportunities and infrastructural development.
He however, warned that while the currency swap would reduce forex pressure in the short term, it may not curtail inflation because trade between the two countries is not a fair deal as Nigeria is an importing nation while china is an exporting nation, saying, “Nigeria ia “importing more from China than China is “importing from Nigeria.”
“To quickly combat the trend and balance trade, Nigeria needs to improve and provide infrastructure and formulate polices that favour local manufacturers”, he concluded.

Tonye Nria-Dappa