The Central Bank of Nigeria on Monday approved the inclusion of the Chinese currency - the Renminbi (Yuan) in the country’s external reserves mix.
The apex bank, in a statement by its Head of Corporate Affairs, Mr. Muhammed Abdulahi, said the move was part of the measures aimed at diversifying the country’s external reserves holdings.
It said that the Chinese Renminbi would now be added to the existing currency mix of the United States dollars, the Euro and the British pound sterling.
The CBN said the approval was given after due consultations with the Federal Government and other key stakeholders in the economy.
It said, “The CBN has gone ahead to engage the Chinese financial regulatory authorities with a view to building strategic and mutually beneficial relationships with key Chinese financial institutions.
“Given the growing economic importance of China in the world, and the increasing trade flows between the two countries, the CBN’s initiative is expected to secure a strategic advantage for Nigeria in its economic and trade relationship with the Peoples Republic of China.
“In order to strengthen collaboration between the monetary authorities of both countries, the CBN has today in Beijing, signed a Memorandum of Understanding with the People’s Bank of China to foster greater cooperation in various areas of central banking.”
The statement also said that Mr. Zhou XiaoChuan signed on behalf of the China while, Mr. Lamido Sanusi signed on behalf of the CBN.
Sanusi was quoted by Reuters to have told the CNBC on telephone from China, “We are looking at anything to start with from five to 10 per cent of our reserves.”
He also said, “The dollar and the euro are not going to disappear. They are going to remain an important part of our holdings.”
Sanusi added that the bank would enter a swap arrangement with China to provide liquidity in its local unit.
He said, “We have already allowed Nigerian companies that want to import from China to settle in Renminbi (Yuan).
“The Chinese government has recently allowed Chinese companies to actually outflow investments in RMB (Renminbi) and we would allow investments to come in RMB.”
Speaking on the development, the Managing Director, Financial Derivatives, Mr. Bismark Rewane said diversifying the country’s forex to the Yuan did not in any way expose Nigeria to any form of risk.
He stressed that trade between Nigeria and China was of great importance and added that the development was in the right direction.
He said, “I don’t think it is a problem; it is not exposing us to risks. We should know that the amount involved is not equal to the total trade between this country and China; so, in reality, it is neutral for the difference in the yield of the Yuan and the dollar is not that significant.
“The development must have been a strategic economic decision, which cannot be reached without due considerations among top executives of the respective authorities.”
Click to signup for FREE news updates, latest information and hottest gists everydayThe apex bank, in a statement by its Head of Corporate Affairs, Mr. Muhammed Abdulahi, said the move was part of the measures aimed at diversifying the country’s external reserves holdings.
It said that the Chinese Renminbi would now be added to the existing currency mix of the United States dollars, the Euro and the British pound sterling.
The CBN said the approval was given after due consultations with the Federal Government and other key stakeholders in the economy.
It said, “The CBN has gone ahead to engage the Chinese financial regulatory authorities with a view to building strategic and mutually beneficial relationships with key Chinese financial institutions.
“Given the growing economic importance of China in the world, and the increasing trade flows between the two countries, the CBN’s initiative is expected to secure a strategic advantage for Nigeria in its economic and trade relationship with the Peoples Republic of China.
“In order to strengthen collaboration between the monetary authorities of both countries, the CBN has today in Beijing, signed a Memorandum of Understanding with the People’s Bank of China to foster greater cooperation in various areas of central banking.”
The statement also said that Mr. Zhou XiaoChuan signed on behalf of the China while, Mr. Lamido Sanusi signed on behalf of the CBN.
Sanusi was quoted by Reuters to have told the CNBC on telephone from China, “We are looking at anything to start with from five to 10 per cent of our reserves.”
He also said, “The dollar and the euro are not going to disappear. They are going to remain an important part of our holdings.”
Sanusi added that the bank would enter a swap arrangement with China to provide liquidity in its local unit.
He said, “We have already allowed Nigerian companies that want to import from China to settle in Renminbi (Yuan).
“The Chinese government has recently allowed Chinese companies to actually outflow investments in RMB (Renminbi) and we would allow investments to come in RMB.”
Speaking on the development, the Managing Director, Financial Derivatives, Mr. Bismark Rewane said diversifying the country’s forex to the Yuan did not in any way expose Nigeria to any form of risk.
He stressed that trade between Nigeria and China was of great importance and added that the development was in the right direction.
He said, “I don’t think it is a problem; it is not exposing us to risks. We should know that the amount involved is not equal to the total trade between this country and China; so, in reality, it is neutral for the difference in the yield of the Yuan and the dollar is not that significant.
“The development must have been a strategic economic decision, which cannot be reached without due considerations among top executives of the respective authorities.”
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