Nigeria’s foreign exchange market is witnessing relative stability, with currency traders attributing the trend to the revival of the Nigeria–China currency swap deal and the growing adoption of peer-to-peer (P2P) transactions.
The swap agreement, first signed in April 2018 between the Central Bank of Nigeria (CBN) and the People’s Bank of China (PBoC), allows both countries to exchange up to $2.5 billion in value between the naira and the Chinese yuan (RMB).
The arrangement was designed to facilitate trade, provide liquidity in local currencies, and reduce heavy reliance on the U.S. dollar in bilateral transactions.
Although the initial three-year agreement expired, Nigeria renewed a $2 billion currency swap with China in December 2024.
The renewal came against the backdrop of dollar shortages that have put immense strain on the naira. With China firmly established as Nigeria’s largest trading partner, accounting for over ₦14 trillion worth of imports in 2024 compared to more than N3 trillion worth of exports, the arrangement is considered vital for trade and investment.
Speaking on the current state of the forex market, President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, said the yuan–naira transactions and P2P trading are helping to inject liquidity and reduce pressure on the naira.
“The Chinese are now collecting naira for yuan, doing P2P. Go to any mining factory and you’ll see Chinese traders engaging in it. These two factors—P2P trading and yuan–naira settlements—are working strongly right now,” Gwadebe told reporters.
He stressed that Nigerian importers no longer need to rely heavily on the dollar for trade with China. Instead, they can settle transactions directly in yuan, bypassing the conversion chain from naira to dollars and then to yuan.
“If a Nigerian is importing from China, all he needs is yuan to settle. Why go through dollars? It doesn’t make sense as a businessman. They collect naira for yuan, so I don’t need to convert into dollars anymore,” Gwadebe explained.
While he acknowledged that the official swap arrangement has faced challenges, Gwadebe said the renewed efforts by traders and P2P platforms were keeping liquidity flowing.
However, not all market watchers agree on the impact. A Lagos-based forex trader, Yusuf, noted that while the swap helps businesses trading directly with China, it has limited effect on Nigeria’s broader currency demand.
“Yes, the swap has influence, but its impact on day-to-day market operations is weak. Many Nigerians still prefer the U.S. dollar because of its global acceptance. Even Chinese suppliers sometimes ask for dollars instead of yuan,” he said.