The Nigerian naira has displayed relative stability in recent weeks, a trend foreign exchange operators attribute to the country’s renewed currency swap arrangement with China and the increasing adoption of peer-to-peer (P2P) forex platforms.
According to traders, these developments have reduced the heavy reliance on the United States (U.S.) dollar, enabling some importers to bypass the dollar entirely by settling directly in Chinese yuan.
Nigeria-China Currency Swap Deal
Nigeria and China first entered a currency swap agreement in April 2018, valued at $2.5 billion, with the goal of reducing dependence on the U.S. dollar and facilitating smoother bilateral trade. The deal allowed businesses to exchange naira and yuan directly, eliminating the need to convert to dollars first.
The agreement was renewed in December 2024, reportedly worth $2 billion, underscoring the importance of China as Nigeria’s largest trading partner. Official data shows that Nigeria imported goods worth ₦14.14 trillion from China in 2024, while exports to the Asian nation totaled just over ₦3 trillion, highlighting a major trade imbalance but also the critical role of the arrangement.
Under the deal, the Central Bank of Nigeria (CBN) and the People’s Bank of China (PBoC) provide liquidity in both currencies, giving importers the flexibility to settle transactions directly in yuan.
Traders Say Demand for Dollar Is Falling
Speaking on the development, the President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, told reporters that the currency swap and the growth of P2P trading have eased pressure on the dollar.
“The Chinese are now collecting naira for yuan through P2P. Go to any mining factory in Nigeria and you will find Chinese traders. There is a lot of liquidity in the market,” he explained.
Gwadebe argued that for many Nigerian businesses, especially importers from China, it no longer makes sense to convert naira to dollars and then dollars to yuan.
“If you are importing from China, all you need is yuan. Why go through the dollar and risk its fluctuations? With the swap, you can pay in naira and your partner in China receives yuan directly. It is far simpler and more stable,” he added.
He also noted that even during periods when the formal deal lapsed, businesses on both sides continued informal arrangements, pending official renewal.
The Rise of P2P Forex Platforms
Apart from the China swap, traders highlighted the increasing popularity of peer-to-peer (P2P) forex platforms as another factor stabilizing the naira.
P2P systems allow individuals to exchange foreign currencies directly with each other, bypassing banks and traditional money changers. Users typically enjoy more competitive rates and greater flexibility, especially for payments such as school fees, medical bills, or remittances abroad.
According to Gwadebe, P2P has become a “game-changer,” especially for Nigerians who previously relied solely on dollar transactions.
“These two things the China swap and P2P are working hand in hand. That is why you are seeing stability,” he said.
Skepticism Over Yuan Liquidity
However, some traders remain cautious about the long-term impact of the swap deal. A currency dealer identified as Yusuf argued that the arrangement’s influence is limited because the yuan is not widely traded in Nigeria’s parallel market.
“You can’t just walk into a bureau de change and buy yuan the way you buy dollars, pounds, or euros. Even when yuan is available, it is not liquid enough in street transactions,” he noted.
He stressed that while the swap is useful for importers trading directly with China, its effect on individuals paying tuition fees, medical expenses, or sending remittances abroad remains minimal since the dollar remains the global standard.
Presidency Credits Tinubu’s Reforms
Reacting to the development, President Bola Tinubu’s Special Adviser on Information and Strategy, Bayo Onanuga, praised the naira’s performance, linking it to the administration’s ongoing reforms.
“This is a positive development for the Nigerian economy. The reforms are restoring foreign confidence in the naira. The almighty U.S. dollar is no longer the only king. The naira is gaining credibility as an international medium of exchange,” Onanuga wrote on his official 𝕏 handle.
He also shared a personal experience, noting that some Chinese e-commerce platforms now accept Nigerian naira cards directly.
In a political swipe, Onanuga criticized opposition leaders, including Nasir El-Rufai, Atiku Abubakar, and Peter Obi, accusing them of ignoring the progress.
“They will never celebrate this because they are waiting for crises to exploit in their attacks against President Tinubu,” he said.
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