Nigeria-China currency swap strengthens Naira as trade shifts from dollar

The National President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, has attributed the recent appreciation of the naira against the U.S. dollar partly to renewed confidence in the Nigeria-China currency swap deal.

Speaking on the stability of the naira, Gwadabe revealed that Chinese investors and businesses operating in Nigeria are increasingly accepting naira for yuan in peer-to-peer (P2P) transactions, reducing the demand for dollars in bilateral trade.

“The Chinese are now accepting naira for yuan through peer-to-peer transactions. Visit any mining factory, and you’ll find Chinese nationals conducting business directly in naira. This is something the Central Bank of Nigeria (CBN) isn’t actively facilitating,” Gwadabe said.

He noted that the mining sector has become a clear example of this shift, with Chinese nationals conducting day-to-day business using the naira. He stressed that the development simplifies trade with China, since importers no longer need to convert to dollars.

“If a Nigerian is importing from China, all he needs now is yuan to complete the transaction. There’s no need for dollars. So why go through a third currency?” he added.

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The progress comes on the heels of a December 2024 bilateral currency swap agreement between Nigeria and China, valued at N3.28 trillion (15 billion yuan). The arrangement is designed to facilitate smoother trade, strengthen the naira, and reduce overreliance on the U.S. dollar.

As of Tuesday, the naira continued its upward trend, exchanging at N1,526.06 per dollar at the official market. The improvement follows recent government reforms aimed at stabilizing the currency and restoring investor confidence.

Presidential spokesperson Bayo Onanuga had earlier remarked that the U.S. dollar is “no longer king over the naira,” citing renewed stability and support from Nigeria’s foreign trade partners.