Naira Stable Against Dollar Amid Nigeria-China Currency Swap

By Ada Samson,Abuja

The Nigerian naira has maintained a period of notable stability against the US dollar, a development financial analysts and bureau de change operators are attributing significantly to the operational Nigeria-China currency swap agreement.

The landmark bilateral deal, designed to facilitate trade between the two nations using their local currencies, is reducing persistent pressure on the naira by decreasing reliance on the US dollar for a substantial portion of international imports.

The National President of the Association of Bureau De Change Operators (ABCON), Aminu Gwadabe, recently provided crucial insight to Nairametrix, explaining that the naira’s appreciation is partly due to renewed confidence in the swap mechanism.

He revealed a significant shift on the ground, stating, “The Chinese are now accepting naira for yuan through peer-to-peer (P2P) transactions.”

This change in commercial behaviour is most visible in key sectors. “Visit any mining factory, and you’ll find Chinese nationals conducting business directly in naira. This is something the CBN isn’t actively facilitating,” Gwadabe added, highlighting an organic, market-driven adoption of the local currency.

The practical effect for Nigerian businesses is profound. As one analyst noted, the swap agreement means that “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?” This sentiment underscores the deal’s primary benefit: simplifying and reducing the cost of trade by eliminating the dollar as an intermediary.

The development comes after Nigeria and China sealed the bilateral currency swap agreement in December 2024, a deal amounting to N3.28 trillion or 15 billion yuan. Its impact is reflected in the exchange rate, with the naira exchanging at N1,526.06 per dollar as of Tuesday, continuing its recent appreciating trend.

While the US dollar remains a dominant global currency, a presidential spokesperson, Bayo Onanuga, recently asserted that “the US dollar is no longer a king over the Naira,” signalling official confidence in the local currency’s strengthening position.

However, some forex traders caution that while the yuan-naira arrangement provides liquidity and stability, the dollar’s global acceptance means it will remain highly sought-after. The rise of P2P forex transactions is also cited as a key factor influencing the market, allowing more direct currency exchanges outside traditional banking channels.

The combined effect of the official swap deal and its organic adoption by traders offers a measure of relief to importers and manufacturers, providing a crucial structural buffer against volatility and marking a positive step towards a more stable foreign exchange regime.