New Telegraph

Currency swap: CBN sells 3.69bn Yuan in three years

The Central Bank of Nigeria (CBN) has said it sold a total of Chinese Yuan (CNY) 3.69 billion between July 2018, when the Bilateral Currency Swap Agreement (BCSA) between  the apex bank and the People’s Bank of China (PBoC) commenced, and June 2021.

 

The CBN, which disclosed this in its 2021 Financial Markets Department (FMD) Half-Year Activity Report, released at the weekend, stated that it sold CNY 1.22 billion and CNY294.09 million in the first six months of this year and the corresponding period of last year respectively.

 

According to the report, “the Bilateral Currency Swap Agreement between the CBN and the People’s Bank of China, which commenced in July 2018, expired in April 2021 and was subsequently renewed.

 

“In the review period, 13 auctions were conducted and RenminbiworthCNY1,217.09  million was sold. “Similarly, in 13 auctions in the corresponding period of 2020, Renminbi worth CNY294.09 million was sold.

 

 

The total sum of CNY3,686.55 million had been sold since inception to end-June 2021.”

 

Following the BCSA that it signed with the PBoC on April 27, 2018, the CBN had in July that year commenced its CNY sales, saying at the time that the sales would be through a combination of spot and short tenured forwards and that the exercise, which would be conducted via the Special Secondary Market Intervention Sales (SMIS) retail window, will be dedicated to the payment of Renminbi denominated Letters of Credit for raw materials and machinery and agriculture.

 

The CBN had also stated that the BCSA with the PBoC was aimed at facilitating trade between the two countries and enhance foreign reserve management, adding that the sale of CNY would further reduce demand pressure for the United States dollar and conserve the external reserves.

 

In the statement it issued on the signing of the BCSA with the PBoC, the apex bank, which noted at the time that it was the third country on the continent (after South Africa and Egypt) to sign such a deal with China, had said that the agreement would allow the two countries to swap a total of 15 billion Renminbi (CNY) for N720 billion, or vice versa, in the next three years.

 

New Telegraph reports that in its 2020 Financial Markets Department (FMD) Half-Year Activity Report, released in February this year, the CBN said it conducted 13 auctions in the first half of last year during which Renminbi worth CNY294.09 million was sold from the drawdown of CNY1.00 billion, compared with Renminbi worth CNY483.18 million in the corresponding period of 2019

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