The naira’s recent stability in the foreign exchange market is being driven by Nigeria’s currency swap agreement with China, allowing Chinese traders to accept naira for yuan, alongside growing peer-to-peer (P2P) currency exchanges, according to forex traders. These factors have reduced pressure on the naira, which has faced persistent dollar shortages.
Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria (ABCON), told Nairametrics that Chinese businesses are increasingly accepting naira for yuan in P2P transactions, particularly in sectors like mining. “This, combined with P2P platforms, is boosting liquidity and stabilizing the naira,” he said. The currency swap, initially signed in 2018 and renewed in December 2024 for $2 billion, enables the Central Bank of Nigeria (CBN) and the People’s Bank of China to facilitate trade in local currencies, reducing reliance on the U.S. dollar. Gwadebe noted that Nigerian importers can now settle transactions directly in yuan, bypassing dollar conversions, which minimizes exchange rate volatility.
However, currency trader Yusuf pointed out limitations, noting that the swap’s impact on daily market operations is minimal. “Most Nigerian traders still prefer dollars due to their global acceptance, and even Chinese suppliers often demand dollars over yuan or naira,” he said. Yuan liquidity remains low in street markets, with P2P transactions having little effect on everyday needs like school fees or remittances, where dollars, pounds, and euros dominate.
The swap deal, designed to enhance bilateral trade—valued at N14.14 trillion in imports and N3 trillion in exports to China in 2024—aims to boost economic cooperation and protect foreign reserves. Yet, with Chinese imports accounting for only 20% of Nigeria’s total, the agreement’s ability to fully address dollar demand remains limited. Analysts credit the naira’s stability to CBN interventions, rising non-oil exports, and reduced speculation, alongside the swap and P2P platforms, but caution that broader dollar preference may temper long-term impacts.
