The Central Bank of Nigeria (CBN) yesterday disclosed that trading in the Chinese Renminbi would commence before the end of this month. Top CBN official, who disclosed this in a chat, said the CBN was finalising modalities for the trading in the Chinese currency. This followed a $2.5 Billion bilateral currency swap agreement signed in May between the CBN and the People’s Bank of China (PBoC).
According to the source, the CBN wants to ensure that the regulations around the trading of the Renminbi are tightened so as not to create any room for arbitrage and currency manipulation. “All hands are on deck, all the work is being done and in the next two weeks trading will commence. “There will be very marginal discount to encourage people to go for it. But the discount will be so small as not to encourage arbitrage, but encourage those who really want to do so that they can get an advantage for embracing the Renminbi currency,” the source added.
The CBN recently held town hall meetings in some cities in the country in its bid to woo businesses importing goods from China to use the Yuan instead of the United States Dollar in its effort to support its Naira currency and boost reserves. Officials said the deal was aimed at reducing reliance on the Dollar and “as such, reduce the pressure on the Naira-Dollar exchange rate.”
Under the swap arrangement, the Central Bank would hold N720 Billion in an account in favour of the PBoC while the Chinese Central Bank would hold 15 Billion Yuan, implying an exchange rate of N48 to the Yuan. The Bank also said the move was aimed at encouraging Chinese firms buying local raw materials and semi-finished goods to pay in Naira.
First Bank of Nigeria Limited, Stanbic IBTC, Standard Chartered Bank (SCB) and Zenith Bank Plc had been appointed the settlement banks for the bilateral currency swap deal. Meanwhile, the CBN has warned that hard times now await hawkers of the Naira, especially those who exchange new currency notes for old ones at motor parks or parties and other social functions.
CBN over the weekend in Ibadan assured economic agents such as the marketers, merchants, shopping malls, supermarkets of the Bank’s continuous and direct supply of huge volumes of the banknotes to traders’ unions.
The development, according to the acting Director, Currency Operations Department, CBN, Mrs. Priscilla Eleje, was to ease difficulties being encountered by the traders and customers occasioned by the inadequate circulation of the lower denomination Bank notes like N200, N100, N50, N20, N10 and N5.
Eleje who was represented at the public sensitisation and enlightenment campaign on CBN direct intervention on lower denomination banknotes at the Alesinloye market by a Deputy Director of the Bank, Mrs. Olufolake Ogundero, added that the Bank recognises the important role markets play in economic transaction hence the need for ease accessibility of the lower denominations to carry out economic transactions.
She said the objectives of the CBN’s intervention was principally to ease accessibility and consequently address the dearth of these denominations in circulation adding that the disbursement has commenced in Abuja and is being extended to Lagos, Kano, Enugu, Onitsha, Ibadan, Yola, Gombe, Katsina and Jos.
Eleje added: “It is a criminal offence punishable by six months imprisonment or a fine of N50,000 or both to sell, spray or mutilate the banknotes. It is also a criminal offence which attracts five years imprisonment without an option of fine for anybody to counterfeit the Naira. The Naira is our pride as a country. So respect it.”
The Ibadan zonal Controller of the Bank, Mr. Musibaudeen Olatinwo, said since a large number of the businesses deal in Fast Moving Consumer Goods (FMCG) and service, the CBN would henceforth supply the banknotes directly to the Joint Traders Association of Oyo State and major retail outlets to meet the high demand for the notes.
Olatinwo said the intervention was timely because of the experience of scarcity of lower denominations in circulation due to hoarding and racketeering, saying: “The CBN has tried to increase the supply of these notes only for it to be diverted from its expected users and sold in the open market. The leader of the market women in the state, Mrs. Labake Lawal, assured the CBN of the cooperation of her members, stressing that “we will comply strictly with the agreed guidelines and utilise the banknotes for the intended purpose.”