The Federal Government has continued to grow its business relationship with China, since the Central Bank of Nigeria signed a Bilateral Currency Swap Agreement with the People’s Bank of China in April 2018.
Nigeria has also continued to increase the loans that have been taken from China.
By the end of 2018, the CBN had injected CNY669.66m in the foreign exchange market to support businesses trading with China.
The CBN stated in its report that “in addition, the CBN continued to participate at the Naira-Settled OTC Futures market and increased the volume and frequency of sale of foreign exchange to BDCs. 17 sales auction of July 20, 2018.
“Since then, 12 bi-weekly auctions had been conducted and renminbi worth CNY669.66m was sold. This helped boost foreign exchange management as it reduced demand pressure for US dollars, thereby conserving foreign reserves. It also helped to improve trade relations with China.”
The CBN said that it sustained its various foreign exchange policies in 2018.
It said that these included foreign exchange intervention in critical sectors, such as agriculture, airlines, petroleum, raw materials and machinery.
The bank said it continued its sale of foreign exchange for invisible transactions, such as the personal and business travel, payment of medical bills and school fees. The SMEs, oil companies and the Investors & Exporters windows provided easy access to foreign exchange.
“The CBN further increased the volume and frequency of sales of foreign exchange to BDCs and sustained its active participation in the Naira-Settled OTC Futures Market established in 2016,” it said.
The CBN recalled that last year, it signed a BCSA with the People’s Bank of China, and commenced full implementation of the agreement with the CBN-Renminbi Retail Secondary Market Intervention.
The report said, “The stability in the foreign exchange market recorded by the bank in 2017 was sustained in the review period. This was due to the positive gains arising from the implementation of the various policies adopted by the bank in line with its flexible exchange rate regime.
“These measures included the creation of special windows such as the I & E, SMEs, SMIS, payment of port charges by oil companies and invisibles , among others.”
On Wednesday, the Federal Executive Council approved another $1bn Chinese loan, to be sourced from the China-Exim Bank for the Gurara II Hydropower project.