The Central Bank of Nigeria (CBN) said it sold 1.45 billion yuan since the inception of the currency swap deal with China and the end of 2019.
The apex bank explained that the sale of the Chinese yuan further reduced demand pressure for the United States dollar and conserved foreign reserves.
This was contained in the CBN’s 2019 Activity Report released on Friday, November 6. The report read: “In line with the Bilateral Currency Swap Agreement with the People’s Bank of China, the fortnightly auction of Chinese Yuan via the Retail SMIS window was sustained.
The CBN, in May 2018, signed the agreement with the PBoC to facilitate trade between the two countries and enhance foreign reserve management, making Nigeria the third country in Africa (after South Africa and Egypt) to sign such a deal with China.
The PBoC-CBN Bilateral Currency Swap Agreement would allow the two countries to swap a total of 15 billion renminbi for N720bn, or vice versa, in the next three years, adding that the deal could be extended by mutual consent.
The 26 auctions were conducted and renminbi worth CNY782.66m was sold in 2019 from the drawdown of CNY1bn.
In the corresponding period of 2018, Renminbi worth CNY669.66m, from the drawdown of CNY1bn was sold in 13 auctions. CNY1,452.32m has been sold from inception to end-December 2019.
The CBN sustained its direct intervention in the interbank foreign exchange market in 2019 by providing a buffer against demand pressures to ensure exchange rate stability.
The total sales stood at $23.89bn, comprising $13.10bn as spot and $10.78bn forwards.
The spot sales comprised $6.04bn at the Investors & Exporters window, $4.27bn at the interbank, $1.67bn for small and medium enterprises and $1.12bn for invisibles.
The bank purchased $11,043.78m. Thus, net sales by the bank amounted to $12,841.23m. The sum of $10,078.01m matured at the forwards, while $3,481.64m remained outstanding at end-December 2019
In the preceding year, total sales stood at $25.67bn, comprising $14.62bn as spot and $11.05bn as forwards, while purchases amounted to $7.80bn, resulting in a net sale of $17.87bn.
The sum of $10.40bn matured at the forwards, while $2.76bn remained outstanding at end-December 2018.
The lower sales into the foreign exchange market by the CBN in 2019 was attributable to the increased level of activity at the I&E window.