Following the approval of the inclusion of the Chinese currency in the country’s external reserves mix last year, the Central Bank of Nigeria has converted $500m of the country’s external reserves into the Yuan in the last six months.

The CBN Governor, Mr. Lamido Sanusi, said in an interview in Cape Town on Friday that the apex bank had converted 1.4 per cent of Nigeria’s reserves into the Chinese currency in the last six months.

Sanusi noted that the CBN planned to buy seven times the amount in the Yuan, adding that the apex bank would gradually increase its Yuan holdings to 10 per cent of its $35bn in reserves.

“Over the past six months, Nigeria has converted 1.4 per cent of its reserves into Chinese currency, largely by selling euros and buying yuan on offshore markets in Hong Kong,” he said.

Sanusi said CBN planned to increase the amount by selling much of the bank’s euro holdings and buying more yuan directly from the People’s Bank of China, adding that, “as those kinds of relationships improve, holding yuan would be very important.”

The apex bank boss, however, added that the United States dollars would continue to make up the bulk of the bank’s reserves.

As part of efforts to diversify the external reserves, the CBN, last year, approved the inclusion of the Chinese currency – the Renminbi (Yuan) in the country’s external reserves mix.The apex bank had, in a statement by its Head of Corporate Affairs, Mr. Mohammed Abdulahi, said that the move was part of the measures aimed at diversifying the country’s external reserves holdings.

He noted that given the growing economic importance of China in the world, and the increasing trade flows between the two countries, the CBN initiative was expected to secure a strategic advantage for Nigeria in its economic and trade relationship with the People’s Republic of China.

It said that the Chinese Renminbi would now be added to the existing currency mix of the United States dollars, the Euro and the British pound sterling.

Analysts said that other African countries were not likely to follow Nigeria’s lead until China’s currency was more readily available on the open market.

The Head, Research, Africa, Standard Chartered Bank, Ms. Razia Khan, said, “It is likely that we will see interest from the oil producers with larger external reserves first. I am guessing it is a trend that will become far more important than it is currently, especially if China takes steps towards currency convertibility as has been hinted by 2015.”

Source: Punch/Ademola Alawiye