CBN Issues Guidelines On Currency Swap Deal

The Central Bank of Nigeria (CBN) on Thursday released guidelines for

the bilateral Currency Swap agreement between Nigeria and China.


The CBN gave the guidelines in a document signed by the Director,

Financial Markets Department, Dr Alvan Ikoku and posted on its



The regulator, in document titled, “Regulations for Transactions with

Authorised Dealers in Renminbi,” said it might conduct bi-weekly

trading sessions to ensure liquidity for trade and direct investment

between the two countries.


The Apex bank in the guidelines mandated commercial banks and merchant

banks, authorised dealers to open Renminbi bank accounts and provide

details to the CBN.


The CBN said, “All Authorised Dealers shall open Renminbi accounts

with a corresponding bank and advise CBN with its Renminbi Account

details which may either be with a bank onshore or offshore China.


“Importers intending to import from China shall obtain Proforma

invoice denominated in Renminbi as part of the documents required for

the registration of Form M.


“FX purchase in the window shall not be used for payments on

transactions in which the beneficiaries are not in China.


“Authorised Dealers shall not open domiciliary accounts denominated in

Renminbi for customers.”


The CBN, however, said the deal would not stop levies on imports and

exports, while unused funds by authorised dealers more than 72 hours

would be returned to the apex bank for repurchase at the bank’s buying



It added that authorised dealers might not earn more than 50 kobo in a

customer’s bid.


The CBN on May 3 signed a bilateral Currency Swap agreement with the

People’s Bank of China (PBoC) worth about $2.5billion. In local

currencies, the swap is worth 15billion Renminbi (RMB) or N720billion.


The deal is expected to reduce the demand for US dollar by Nigerians

importing goods from China, and consequently strengthen the value of

the Naira.


The deal will reduce certain barriers for Nigerian importers of goods

from China as well as the cost of transactions in multiple currencies.