The Digest:
A currency debate has emerged as some forex traders credit the naira’s recent stability to the success of a currency swap agreement with China. They claim Chinese traders are now collecting naira instead of dollars, reducing pressure on the local currency.
Key Points:
- Some forex traders attribute the naira’s recent stability to the currency swap deal with China.
- They claim Chinese traders are now accepting naira for the yuan, reducing demand for the US dollar.
- The President of the Association of Bureau De Change Operators of Nigeria (ABCON) also cited peer-to-peer (P2P) trading as a key factor.
- However, another currency trader argues that the swap's day-to-day impact is small.
- He notes that most Nigerians and even Chinese suppliers still prefer the US dollar for transactions.
- The original currency swap agreement between Nigeria and China was first signed in 2018.
- The deal was designed to reduce dependence on the dollar as a basis for trade.
Sources: Nairametrics
