Currency swap deal: CBN begins sale of Chinese yuan

The Central Bank of Nigeria on Friday, commenced its intervention in the sale of foreign exchange in Chinese Yuan .
China's yuan

The implementation signalled the consummation of the Bilateral Currency Swap Agreement signed with the People ’ s Bank of China on April 27, 2018 .
The apex bank in a statement issued on Friday explained that the sale of foreign exchange under the agreement would be done through a combination of spot and short tenored forwards.
It added that the exercise , is 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 and machinery and agriculture .
The CBN Spokesman , Mr Isaac Okorafor , explained in the statement that the apex bank would receive bids from all authorized 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 reads 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 . ”
Speaking on the bid period , he said authorised dealers would be requested to submit their customers ’ bids from 9 . 00 am to 12 . 00 pm on Friday July 20 , 2018 , adding that bids received after this time would be disqualified .
On funding , he disclosed that authorized dealers would be required to debit the customers ’ accounts for the naira equivalent of their bids, stressing that the CBN would debit authorized dealers ’ current account on the day of intervention to the tune of the naira equivalent of their bid request .
Okorafor further explained in the statement that there would be no predetermined spread on the sale of Forex Forwards by Authorised Dealers to end -users under the Special SMIS-Retail ,
He added that Authorised Dealers would be allowed to earn 50 kobo on the customers ’ bids.


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