ECONOMIC ANALYSIS: No Currency Swap Deal with China — FG (By Akinrinde, Ibukunoluwa Jeremiah)

Email: ibukunoluwaakinrinde@gmail.com

Twitter: @IbukunoluwaIbk

The Federal Government (FG) reorients Nigerians on the misconceived outcomes of the president’s official visit to China. FG explains that Nigeria has not entered into currency-swap deal with China; rather, China in efforts to internationalize its currency (like the dollar and euro) seeks to offer support to Nigeria in its diversification efforts through FDI and other financial assistance.

Aside from the proposed $6 billion loan from China, other expected benefits of this relationship includes getting a $15 million and $50 million assistance for agriculture and defense respectively, investment of $55 million into mineral projects and $2.5 million into housing, textiles and food processing industries, increased number of scholarships to be awarded to Nigerians, etc.

All these expected benefits and an understanding that the Chinese economy has recovered from its financial crises explains why the mutual relationship should exist. This relationship is expected to aid China’s purpose of internationalizing the yuan while supporting in the attainment of Nigeria’s goal of economic diversification. The internationalization of yuan would mean a ready access to yuan for direct trade with China; thus, could stimulate more demand for Chinese goods and service and ease remittance of profit by Chinese firms (operating in other countries) back to China.

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