Naira remains stable as CBN plans to diversify FX reserves to yuan

The naira continued its stability at the foreign exchange market as it yesterday close at N320 against the dollar at the autonomous market. Naira also closed stable at the parallel market at N322/$.

The Central Bank of Nigeria (CBN) said yesterday that it planned to diversify its foreign exchange reserves away from the dollar by switching some into yuan. It converted up to a tenth of its reserves into yuan five years ago.

Lin Songtian, director-general of the Chinese foreign ministry’s African affairs department, said a framework on currency swaps had been agreed with Nigeria, making it easier to settle trade deals in yuan. China has signed similar swap agreements with countries like Kazakhstan and Argentina to promote wider use of its yuan, Reuters reports.

Nigeria plans to raise N167.51 billion ($843.67m) in treasury bills with maturities ranging between 3-month and 1-year on April 20, the central bank said on Tuesday.

The bank aims to raise N36.78 billion in the 3-month paper, N35 billion in the 6-month note and N95.73 billion in the 1-year debt, using the Dutch auction system.

Nigeria issues short-dated debt to mop-up excess liquidity in the banking system to curb rising inflation, finance a portion of the budget deficit and help commercial lenders manage their liquidity.

On the other hand, Dangote Group, the company owned by Africa’s richest man, Aliko Dangote, signed a deal on Tuesday for a $2 billion loan from the Industrial Commercial Bank of China Limited for two cement plants, he told Reuters.

“The interest rate is okay, quite favourable with me,” Dangote said, without elaborating. “It’s for my two cement companies that we are establishing in Nigeria.”