- The guideline mandated commercial banks and merchant banks including authorised dealers to open Renminbi bank accounts and provide details to the CBN.
Here's what every importer and FX dealer should know about the CBN's Naira-Yuan swap
The bank said funds received under the Naira-Yuan Swap Agreement must be utilised within 72 hours.
Nigeria's central bank has released guidelines for the bilateral Currency Swap agreement between the country and Republic of China.
The regulator said it will conduct bi-weekly trading sessions to ensure liquidity for trade and direct investment between the two countries.
The guidelines was contained in document signed by the Director, Financial Markets Department, Dr Alvan Ikoku and posted on its website on Thursday, June 7, 2018.
The document titled “Regulations for Transactions with Authorised Dealers in Renminbi”, the bank said funds received under the Naira-Yuan Swap Agreement must be utilised within 72 hours.
The CBN, in the guidelines, mandated commercial banks and merchant banks including authorised dealers to open Renminbi bank accounts and provide details to the CBN.
Isaac Okorafor, CBN spokesman had said: “The deal, which is purely an exchange of currencies, will also make it easier for Chinese manufacturers seeking to buy raw materials from Nigeria to obtain enough Naira from banks in China to pay for their imports from Nigeria. Indeed, the deal will protect Nigerian business people from the harsh effects of third currency fluctuations.”
Guidelines for importers intending to import from China
1. Importers intending to import from China shall obtain Proforma invoice denominated in Renminbi as part of the documents required for the registration of Form M.
2. Foreign exchange purchase in the window shall not be used for payments on transactions in which the beneficiaries are not in China.
3. The Naira-Yuan deal would not stop levies on imports and exports
Guidelines for authorised dealers
1. All Authorised Dealers shall open Renminbi accounts with a corresponding bank and advise CBN with its Renminbi Account details which may either be with a bank onshore or offshore China.
2. Authorised Dealers shall not open domiciliary accounts denominated in Renminbi for customers.
3. Unused funds by authorised dealers more than 72 hours should be returned to the apex bank for repurchase at the bank’s buying rate.
4. Authorised dealers might not earn more than 50 kobo in a customer’s bid.
Recall that the CBN, on May 3, signed a bilateral Currency Swap agreement with the People’s Bank of China (PBoC) worth about $2.5billion.
The currency swap deal, which has taken two years of negotiation, is valued at 16 billion Renminbi (RMB) and about 720 billion in Naira. The deal is expected to reduce the demand for US dollar by Nigerians importing goods from China, and consequently strengthening the value of the Naira.
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