The Lagos Chamber of Commerce and Industry (LCCI) has lauded the Federal Government for signing an agreement with China to increase Yuan component of Nigeria’s external reserves.
Mr Muda Yusuf, the Director-General of LCCI, gave the commendation in an interview on Wednesday in Lagos.
It would be recalled that Industrial and Commercial Bank of China (ICBC) and CBN on April 12 signed an agreement on Yuan transactions during the visit of President Muhammadu Buhari to China.
The agreement is to allow free flow of Yuan among various banks in Nigeria.
A 2015 CBN foreign exchange reserves report stated that currency composition of the country’s reserves declined in all the invested currencies except those in Yuan which increased by 0.4 percent.
According to the CBN’s website, the country’s external reserves which were $27.871 billion as at March 24, dropped to $27.864 billion as at March 31.
Yusuf said: “It is good for our economy because it will diversify our portfolio because the Yuan is a strong and stable currency backed by a strong economy with which we do a lot of international transactions.
“The Chinese economy is the second largest economy in the world; there is a relationship between the size of an economy and the strength or quality of its currency.
“China is third major export destination in Africa, while China is Nigeria’s largest source of imports and third major trade partner.
“This move will greatly improve the fortunes of Nigeria’s economy in view of the rising profile of her trade relations with China.”
He said that the diversification would maintain the value of the country’s external reserves while eliminating losses at a time of increased volatility in major world currencies.
Trade volume between Nigeria and China is put at $14.9 billion in 2015 from $2.8 billion recorded in 2005.
In 2015, Nigeria accounted for 8.3 percent of total trade volume between China and Africa and 42 percent of the total trade volume between China and the Economic Community of West African States (ECOWAS).