By Francis Ogwo
About 1.45 billion yuan has been sold by the Central Bank of Nigeria since it commenced the currency swap deal with China towards the end of 2019.
This was revealed by the CBN on Friday in its 2019 Activity Report in which it further disclosed that the sale of the Chinese yuan minimized the demand pressure for the United States dollar and conserved foreign reserves.
“In line with the Bilateral Currency Swap Agreement with the People’s Bank of China(pBoC)the fortnightly auction of Chinese Yuan via the Retail SMIS window was sustained,” it said.
Recall that the CBN, in May 2018, signed the agreement with the PBoC to facilitate trade between the two countries and enhance foreign reserve management, making Nigeria the third country in Africa (after South Africa and Egypt) to sign such a deal with China.
It revealed that the PBoC-CBN Bilateral Currency Swap Agreement breed an opportunity for the two countries to swap a total of 15 billion renminbi for N720bn, or vice versa, in the next three years, adding that the deal could be extended by mutual consent.
According to the apex bank in the report , 26 auctions were conducted and renminbi worth CNY782.66m was sold in 2019 from the drawdown of CNY1bn.
“In the corresponding period of 2018, Renminbi worth CNY669.66m, from the drawdown of CNY1bn was sold in 13 auctions. CNY1,452.32m has been sold from inception to end-December 2019,” it added.
In the report, the CBN sustained its direct intervention in the interbank foreign exchange market in 2019 by providing a buffer against demand pressures to ensure exchange rate stability.
It said total sales stood at $23.89bn, comprising $13.10bn as spot and $10.78bn forwards.
The central bank said the spot sales comprised $6.04bn at the Investors & Exporters window, $4.27bn at the interbank, $1.67bn for small and medium enterprises and $1.12bn for invisibles.
“On the other hand, the bank purchased $11,043.78m. Thus, net sales by the bank amounted to $12,841.23m. The sum of $10,078.01m matured at the forwards, while $3,481.64m remained outstanding at end-December 2019,” it added.
The CBN noted that in the preceding year, total sales stood at $25.67bn, comprising $14.62bn as spot and $11.05bn as forwards, while purchases amounted to $7.80bn, resulting in a net sale of $17.87bn.This is with the sum of $10.40bn maturing at the forwards, while $2.76bn remained outstanding at end-December 2018.
