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Nigeria Lawmakers Push for Chinese Yuan in Nigeria’s Currency Mix

Boom RadioNG | December 21, 2023

In a bid to combat the naira’s ongoing decline, the Nigerian House of Representatives has proposed adopting the Chinese Yuan (CNY) as an official foreign exchange reserve currency. This proposal, if implemented, would mark a significant shift in Nigeria’s currency strategy and potentially strengthen ties with China.

The motion, championed by Jafaru Gambo Leko, cites the economic instability and uncertainty caused by the naira’s depreciation. It aligns with the International Monetary Fund’s (IMF) recommendation for developing countries like Nigeria to diversify their foreign reserves.

Proponents argue that the globally recognized and stable Yuan could offer several advantages:

  • Mitigate the impact of naira depreciation.
  • Reduce risks associated with exchange rate fluctuations.
  • Enhance Nigeria’s economic stability.
  • Strengthen trade and economic ties with China, a major trading partner.

The House has mandated its relevant committees to collaborate with the Central Bank of Nigeria (CBN) and explore mechanisms, policies, and partnerships needed to implement the proposal. A report is expected within four weeks, paving the way for further legislative action.

House of Representatives, Federal Republic of Nigeria

This proposal, while potentially beneficial, raises questions about the long-term implications of adding the Yuan to Nigeria’s reserves. Concerns include potential dependence on China, the Yuan’s volatility compared to other major currencies, and the impact on existing trade relationships.

The coming weeks will be crucial as lawmakers and the CBN delve deeper into the proposal, weighing its potential benefits against potential risks and ensuring it aligns with Nigeria’s broader economic and geopolitical objectives.

Written by Boom RadioNG

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