Currency Pressure: Economist urged CBN to Take currency swap seriously and reduce reliance on dollars

NIGERIA, Sept. 2 – An economist, Prof. Akpan Ekpo, has urged the Central Bank of Nigeria (CBN) to take seriously the currency swap agreement with Peoples Bank of China (PBoC) to reduce reliance on dollars for trade.

Ekpo, a former Director-General of West African Institute for Financial and Economic Management (WAIFEM), gave the advice while speaking with the News Agency of Nigeria (NAN) on Saturday in Lagos.

“This is the time to implement the Nigeria-China currency swap so that we don’t put all our eggs in one basket.

“So Nigerians who are dealing with China should deal with Chinese currency or with naira not with dollar or euro; that will reduce the pressure on dollar or pound.

“This is the time to take it very seriously; the Federal Government signed the agreement, it was done briefly then we didn’t know what happened again.

“If you look at the global trend, emerging markets by the Brics are trying to trade with bilateral currency to downplay the importance of dollar, euro or pound because these currencies are not theirs and they can’t print them.

“So, if we can now implement the Chinese-naira swap, it will be very helpful for business trade.’’

The expert also linked the rising inflation to the exchange rate, saying “if any business man spends more naira to buy dollars and does not know what the cost will be the next time, he will jerk up the price.

“So inflation passed through the exchange rate will be automatic as business men continue to use more naira to buy dollars.’’

NAN recalls that the CBN in May 2018, signed a currency swap deal valued at renminbi (RMB) 16 billion (about $2.5 billion) with the PBoC.

The swap deal was signed by Godwin Emefiele, the suspended CBN Governor, and Yi Gang, the former PBoC Governor.

The deal was designed to provide the Chinese and Nigerian currencies directly to industrialists and other businesses from both countries.

The apex bank said the agreement would provide naira liquidity to Chinese businesses and provide RMB liquidity to Nigerian businesses, thereby improving the speed, convenience and volume of transactions between the two countries.