First Word on SB

First Word on SB

Telling stories that matter to Nigerians


FW: Why did Nigeria sign a currency swap with China?

Aisha-Nana Salaudeen

Aisha-Nana Salaudeen

Aisha is trying to figure out how to tell as many impact stories as possible in different forms.

This article is part of our #FirstWord series to provide context on trending news.


The Central Bank of Nigeria (CBN) entered a three-year currency swap agreement worth $2.4 billion with the Peoples Bank of China (PBOC). The swap, worth $2.4 billion, is to boost commercial ties and reduce the need to use the dollar in bilateral trade between both countries. The deal was signed on Friday, April 27, 2018, in China.


What does this mean?

In a currency swap, one party borrows a specific amount of foreign currency from another at agreed interest and exchange rates. At the same time, it lends the same amount of money to the other party in its own currency. In this case, the CBN swapped ₦720 billion for 15 billion yuan, with each amount deposited in the corresponding central bank.

During the contract period, Nigeria would have to pay yuan interest on the borrowed amount (and vice versa), though the government has provided no information on how much this interest would be and whether it is a fixed or floating interest rate.

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