The naira continued its upward trend on Tuesday, appreciating in both official and unofficial foreign exchange (FX) markets as Chinese businesses in Nigeria increasingly adopt the local currency for transactions, bypassing the US dollar.
By the close of trading, the naira appreciated slightly by 4 kobo, with the dollar quoted at N1,526.05 at the Nigerian Foreign Exchange Market (NFEM), compared to N1,526.09 on Monday, according to data from the Central Bank of Nigeria (CBN).
In the parallel market, commonly known as the black market, the naira remained stable at N1,540 per dollar. GTBank’s FX rate for international transactions also declined, trading at N1,534 per dollar from N1,542 on Monday.
Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), attributed the naira’s improved performance partly to increased yuan-naira transactions driven by Chinese businesses operating in the country.
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“The Chinese are now accepting naira for yuan through peer-to-peer (P2P) transactions,” Gwadabe said. “Visit any mining factory, and you’ll find Chinese nationals conducting business directly in naira. This is something the CBN isn’t actively facilitating.”
He added, “If a Nigerian is importing from China, all he needs now is yuan to complete the transaction. There’s no need for dollars. So why go through a third currency?”
Nigeria and China renewed their bilateral currency swap agreement in December 2024, further solidifying economic cooperation between the two nations. The renewed deal, jointly announced by the CBN and the People’s Bank of China (PBOC), amounts to N3.28 trillion, approximately 15 billion yuan or $2.09 billion.
Valid for three years and renewable upon mutual agreement, the swap deal aims to boost financial collaboration, simplify transactions involving the naira and yuan, and reduce reliance on the U.S. dollar in trade.
According to the PBOC, the renewed arrangement is expected to enhance bilateral trade and investment by providing businesses with easier access to local currencies, lowering transaction costs, and streamlining cross-border payments. The agreement reflects a broader effort to strengthen economic and diplomatic ties between Nigeria and China.
