CBN To Auction Chinese Yuan After Currency Swap Deal

The Central Bank of Nigeria has directed banks to submit bids for the Chinese yuan, in its second auction of the currency after a currency swap agreement with the People’s Bank of China (PBoC), Reuters quoted traders to have said yesterday.

The CBN in May signed a $2.5 billion three-year bilateral currency swap agreement with the PBoC to facilitate trade between the two countries. It is expected that the currency swap deal will reduce pressure on the naira-dollar exchange rate by weaning Nigerian importers off the dollar.
The apex bank sold 69.86 million yuan ($10.16 million) in its first auction of the Chinese currency at a range of N49-N51. Bids at the auction must be backed by customer invoices, with the exchange rate determined via a book building process, the newswire reported.

The CBN in a recent circular stated that for an authorised bank to access the bi-weekly auction of the Chinese currency, such dealers “shall open Renminbi accounts with a correspondent bank and advise it (CBN) with its Renminbi account details which may either be with a bank onshore or offshore China”.

August 20, 2018