There’s hope of increased accessibility to hardware and other manufacturing goods for Nigerian manufacturers and traders as the Central Bank of Nigeria (CBN) over the weekend flagged off its intervention in the sale of foreign exchange in Chinese Yuan (CNY).
This signalled the official take-off of the Bilateral Currency Swap Agreement (BCSA) signed with the People’s Bank of China (PBoC) in April.
The apex bank said the major import of the foreign exchange currency diversification is aimed at checking the rising pressure on the United State currency, the Dollar, whose high demand for all international transaction before now has had a negative impact on the county’s inflationary trend, leading to the devaluation of the Naira.
Also, by adopting a second direct convertible currency, the additional cost of having to go through a third currency is now being removed in what is a major boost to the bottomline of imported goods and services from China.
In a statement confirmation the new regime, the CBN disclosed that the sales shall be through a combination of spot and short tenored forwards.
It added that the exercise, which shall be Special Secondary Market Intervention Sales (SMIS) retail, would be dedicated to the payment of Renminbi denominated Letters of Credit for raw materials, machinery and agriculture.
The Bank’s spokesman, Isaac Okorafor, explained that the CBN would receive bids from all authorised dealers, adding that they would not be applying the relevant provisions of its Revised Guidelines for the Operation of the Inter-bank Foreign Exchange Market, which requires all SMIS bids to be submitted to the CBN through the Forex Primary Dealers (FXPDs).
As a further incentive to traders, Okorafor said the CBN would not be applying the relevant provisions of the Guidelines which equally provide that “Spot FX sold to any particular end-user shall not exceed 1% of the overall available funds on offer at each SMIS session”.