The naira has shown signs of relative stability in recent weeks, and forex traders have confirmed this development, attributing the trend to Nigeria’s renewed currency swap deal with China and the growing use of peer-to-peer (P2P) foreign exchange platforms.

The development, they argue, has eased the pressure on the United States (U.S) Dollar by allowing Nigerian importers dealing with Chinese partners to settle transactions directly in yuan.

Naijaonpoint reports that Nigeria and China first signed the currency swap agreement in April 2018, valued at $2.5 billion, to reduce overreliance on the US dollar and make bilateral trade easier.

Under the deal, the Central Bank of Nigeria (CBN) and the People’s Bank of China (PBoC) provide liquidity in naira and yuan for businesses, enabling Nigerian importers to pay directly in yuan while Chinese exporters accept naira.

The arrangement was renewed in December 2024, reportedly worth $2 billion, as Nigeria sought to strengthen trade ties with its largest trading partner.

Official trade data shows that Nigeria imported goods and services worth ₦14.14 trillion from China in 2024, while exports to the Asian giant stood at over ₦3 trillion, underlining the importance of the deal for the Nigerian economy.

Traders Say Demand for Dollar Is Easing

In a recent interview, the President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, told Naijaonpoint that the deal, coupled with growing P2P transactions, has helped to ease demand pressure on the dollar.

“The Chinese are now collecting naira for yuan, doing P2P. Go to any mining factory and you will see a Chinese man in Nigeria. There is a lot of liquidity in the market,” he explained.

Gwadebe argued that the logic of converting naira to dollars and then dollars to yuan no longer makes sense for Nigerian importers.

“If a Nigerian is importing from China, all he needs is yuan to settle his affairs. You don’t even need dollars now. Why go through a third currency? Collect my naira for yuan in China, and that’s it. I don’t want the dollar fluctuations anymore,” he said.

Gwadebe, however, noted that although the formal deal had technically expired at some point, Nigerian and Chinese businesses continued to transact under similar informal arrangements, pending official renewal.

The Role of P2P in Forex Stability

Naijaonpoint reports that apart from the China deal, traders say the popularity of peer-to-peer (P2P) forex platforms has also played a role in stabilising the naira.

P2P platforms allow individuals to exchange foreign currencies directly with one another, cutting out banks or money transfer operators. Users often find better rates and more flexibility than through official channels.

For Nigerians paying for tuition abroad, medical bills, or remittances, P2P transactions have become an alternative to traditional bureaux de change.

Gwadebe described it as a game-changer: “These two things, the Chinese swap and P2P, are working right now. That’s why you’re seeing some stability.”

Why the Dollar Still Dominates

However, not everyone agrees that the swap deal is a silver bullet. Another trader, Yusuf, pointed out that while the agreement helps importers dealing with Chinese partners, its impact on the broader forex market is limited.

“Yes, the swap has some influence, but the effect is not that strong in daily market operations. Many Nigerian traders still prefer the US dollar because it is more widely accepted globally. Even Chinese suppliers sometimes insist on dollars,” he said.

Yusuf added that the yuan is not readily available in the parallel market.

“You can’t just walk into a bureau de change and buy yuan like you buy dollars, pounds, or euros. Even if yuan is available, it’s not liquid in the street market,” he explained.

He further noted that for personal transactions such as school fees, medical bills, or remittances, the swap deal has little to no impact, as dollars remain the global standard.

Presidency Welcomes Development, Mocks El-Rufai, Peter Obi, Atiku

Reacting to the development via his 𝕏 handle on Tuesday, the Special Adviser to President Bola Tinubu on Information and Strategy, Bayo Onanuga, hailed the naira’s improved standing in international trade, crediting the reforms of President Bola Tinubu.

“This is a salutary development for the Nigerian economy. The Tinubu reforms are making foreigners have faith in the naira. The almighty US dollar is not the ultimate king here. The naira is waxing stronger as an international means of exchange,” Onanuga said.

Onanuga added a personal note, saying: “I also buy some items on Chinese platforms. I can confirm that they accept naira cards.”

He also took a swipe at opposition figures, claiming they would not celebrate the positive development.

“El-Rufai, Atiku Abubakar, and Peter Obi will never celebrate this. They are waiting for disasters to vent their political frustration on President Tinubu,” he added.