Forex: CBN begins yuan-naira swap implementation { No fixed exchange rate again}


The Central Bank of Nigeria (CBN) yesterday began the sale of foreign exchange in Chinese Yuan (CNY), signaling the consummation of the Bilateral Currency Swap Agreement (BCSA) signed with the People’s Bank of China (PBoC) on April 27, 2018.
A statement issued by the bank yesterday disclosed that the sales would be through a combination of spot and short tenored forward. It added that the exercise, which would be Special Secondary Market Intervention Sales (SMIS) retail, would be dedicated to the payment of Renminbi denominated letters of credit for raw materials, machinery and agriculture.

The agreement will allow the two sides to swap a total of 15 billion Chinese yuan (2.35 billion dollars) for 720 billion Nigerian naira, or vice versa, in the next three years, the People’s Bank of China, PBOC, said on its website.

The bank’s spokesman, Isaac Okorafor, said the CBN would receive bids from all authorized dealers. He added that due to the peculiarity of the exercise, the bank would not be applying the relevant provisions of its revised guidelines for the operation of the inter-bank foreign exchange market which directs all SMIS bids to be submitted to the CBN through the Forex Primary Dealers (FXPDs).

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