The Federal Government has said that reports of Nigeria’s currency deal with China were speculative and unfounded. The minister for Foreign Affairs, Geoffrey Onyeama, clarified that contrary to widespread belief, Nigeria had no currency swap deal with China during the last visit by President Buhari to the country.
Onyeama made the remarks at a briefing with State House Correspondents after Wednesday’s Federal Executive Council (FEC)’s meeting. The minister explained that China was under pressure to internationalize its currency based on the strength of its economy.
The minister said “It’s not really a swap. What it takes is that as the Chinese economy goes strong, there is some pressure on them from the trading partners, international financial institutions. They agreed that the money should be internationalized. So, they started that for a while. They were protecting it also. They did not allow it to be fully exchangeable. But now, their economy is fully strong, they are looking for a way to internationalize the currency. Now, they were saying essentially that they wanted to segment it.
“For Southern Africa, South Africa is going to be the sort of a hub for the currency. So, they are going to be the focal point for the Chinese to make that available for trade in that area.
“In west Africa, they are looking for a hub. Ghana is interested in being the hub for the currency to circulate it for those who want to use it. It is not compulsory. But Nigeria is a bigger country with bigger economy. So that does make sense. And they became a kind of attracted to Nigeria to be the hub.
“So, for us, the benefit is that it gives us small flexibility. So, if Nigeria is buying Chinese goods, for instance, it will be in our interest to use the Yuan because we know there is a lot of squeeze for the dollar. But we still use the dollar. But if it is not enough and there are some people who want to invest in the country, instead of crying that they cannot take dollar out, there might be Yuan that they would be happy to take out because it is now internationalized as a currency and they can use it. So, it gives us a much larger option,” he explained.
Onyeama made the remarks at a briefing with State House Correspondents after Wednesday’s Federal Executive Council (FEC)’s meeting. The minister explained that China was under pressure to internationalize its currency based on the strength of its economy.
The minister said “It’s not really a swap. What it takes is that as the Chinese economy goes strong, there is some pressure on them from the trading partners, international financial institutions. They agreed that the money should be internationalized. So, they started that for a while. They were protecting it also. They did not allow it to be fully exchangeable. But now, their economy is fully strong, they are looking for a way to internationalize the currency. Now, they were saying essentially that they wanted to segment it.
“For Southern Africa, South Africa is going to be the sort of a hub for the currency. So, they are going to be the focal point for the Chinese to make that available for trade in that area.
“In west Africa, they are looking for a hub. Ghana is interested in being the hub for the currency to circulate it for those who want to use it. It is not compulsory. But Nigeria is a bigger country with bigger economy. So that does make sense. And they became a kind of attracted to Nigeria to be the hub.
“So, for us, the benefit is that it gives us small flexibility. So, if Nigeria is buying Chinese goods, for instance, it will be in our interest to use the Yuan because we know there is a lot of squeeze for the dollar. But we still use the dollar. But if it is not enough and there are some people who want to invest in the country, instead of crying that they cannot take dollar out, there might be Yuan that they would be happy to take out because it is now internationalized as a currency and they can use it. So, it gives us a much larger option,” he explained.
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