CURRENCY SWAP AGREEMENT: CBN directs banks to bid for Chinese yuan

The Central Bank of Nigeria on Friday commenced its intervention in the sale of foreign exchange in the Chinese yYuan.

This signalled the implementation of the Bilateral Currency Swap Agreement signed by the CBN with the People’s Bank of China on April 27, 2018.

The apex bank explained in a statement issued on Friday that the sale of foreign exchange under the agreement would be done through a combination of spot and short-tenor forwards.

It added that the exercise was in form of a Special Secondary Market Intervention Sales retail and would be dedicated to the payment of Renminbi denominated Letters of Credit for raw materials, machinery and agriculture.

The CBN spokesman, Mr Isaac Okorafor, explained in the statement that the apex bank would receive bids from all authorised dealers.He added that due to the peculiarity of the exercise, the apex bank would not be applying the relevant provisions of its revised guidelines for the operation of the Inter-bank Foreign Exchange Market, which direct all SMIS bids to be submitted to the CBN through the Forex Primary Dealers.

The statement read in part, “The CBN would also not be applying the relevant provisions of the guidelines, which equally provide that spot foreign exchange sold to any particular end-user shall not exceed one per cent of the overall available funds on offer at each SMIS session.”