Nigeria and China have renewed their 15 billion Yuan (about $2.09 billion) or N3.28 trillion, Bilateral Currency Swap Agreement (BCSA), designed to boost trade and investment between the two countries.

According to a statement posted on the People’s Bank of China’s (PBoC) website on Friday, the agreement, which is valid for three years, can be renewed upon mutual consent.

It said that the renewal of the currency swap arrangement will strengthen financial cooperation between China and Nigeria, expand the use of the two currencies, and promote and facilitate bilateral trade and investment.

Saturday Telegraph reports in its bid to curb local demand for the dollar, the Central Bank of Nigeria (CBN), on April 27, 2018 signed the BCSA with the People’s Bank of China (PBoC).

The agreement, which commenced in July 2018, expired in April 2021 and was subsequently renewed for another three year term.

In announcing the commencement of the CNY sales, the CBN had said at the time that the sales would be through a combination of spot and short tenured forwards, adding that the exercise, which would be conducted via the Special Secondary Market Intervention Sales (SMIS) retail window, would be dedicated to the payment of Renminbi (Yuan) denominated Letters of Credit for raw materials and machinery and agriculture.

Noting that Nigeria, at the time, was the third country on the continent (after South Africa and Egypt) to sign such a deal with China, the apex bank also stated that the BCSA with the PBoC was aimed at facilitating trade between the two countries, as well as enhancing for foreign reserve management.

It pointed out that the sale of CNY would further reduce demand pressure for the US dollar and conserve the external reserves.

Available data indicates that the CBN made total sales of Chinese Yuan (CNY) CNY7.04 billion, under the BCSA, between July 2018 and the end of June 2022.