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Nigeria, China reach agreement to sidestep US dollar in N720 billion trade deal

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CBN governor, Gdowin Emefiele with chairman of the People's Bank of China after the agreement was signed

In another example of the success of the Chinese government to promote the use of its currency at the expense of the US dollar, Nigeria and China has signed a major trading deal involving a direct swap of the currency of both nations.

A statement on the website of the People’s Bank of China revealed the agreement.

‘’On April 27, 2018, with the approval of the State Council, the People’s Bank of China signed a bilateral local currency swap agreement with the Central Bank of Nigeria in Beijing for the purpose of facilitating bilateral trade and direct investment, and safeguarding financial market stability in both countries.

‘’The size of the swap facility is RMB 15 billion/NGN 720 billion. The agreement is valid for three years and can be extended upon mutual consent.’’

China has reached such deals with other resource rich nations such as Russia and Iran.

A currency swap deal allows two institutions to exchange payments in one currency for equivalent amounts in order to facilitate bilateral trade settlements and provide liquidity support to financial markets.