The Chinese yuan now makes up 7.5 per cent of Nigeria’s foreign exchange reserves, latest figures from the Central Bank of Nigeria (CBN) has revealed. According to the banking watchdog’s external sector development report for the first quarter of 2015, of the country’s stock of external reserves, which stood at $29.36 billion as at the end of March 2015, the yuan was worth $2.21 billion(7.5 per cent). Latest numbers from the CBN however, showed that the nation’s external reserves stood at $30.845 billion as at June 24, 2015. The renminbi, which is the official name of the Chinese currency, trailed the United States dollar, which accounts for 75.4 per cent of the reserves.
The report noted: “In Q1 2015, the share of all the currencies in the basket declined from their respective levels in Q4 2014 and Q1 2014, except for the Chinese yuan, which increased by 0.4 and 151.7 per cent. The currency composition of foreign reserves and their shares were: US dollar worth US$22.15 billion (75.4 per cent), euro worth US$1.93 billion (6.6per cent), Chinese yuan worth US$2.21 billion (7.5per cent), GB pounds worth US$0.75 billion (2.6per cent) and Special Drawing Rights (SDR) units worth US$2.31 billion (7.9 per cent).”
The CBN had in January last year revealed plans to increase the Chinese yuan’s proportion of the country’s external reserves from two per cent to seven per cent, citing the growing strength of the Asian giant’s currency in global trade. Former Deputy Governor (Operations), CBN, Dr. Kingsley Moghalu, who disclosed this, had explained then: “It was clear to us that the future of international economics and trade will shift in large part to business with and by China. Ultimately the renminbi is likely to become a global convertible currency.” It would be recalled that the regulator started to diversify its reserves into yuan in 2011 and announced at the time that it was working with the People’s Bank of China to boost the holdings. Indeed, former CBN Governor, Lamido Sanusi, had revealed in September 2013 that the Central Bank’s decision to diversify the country’s reserve base from the dollar by investing in the yuan had paid-off twoyears after. Sanusi had said: “The issue about risk is changing because of the dynamics of the global economy and you know pretty well that currently there are issues around the strength of the currencies all over the globe and the debate is on-going on whether or not the dollar would continue to be the de-facto reserve currency.
That’s why so many countries are changing the basket of currencies where they keep the reserves so that they can mix their risksand then, they are beginning to diversify.” According to a Central Banking Publications survey of central banks carried out in March this year, sponsored by HSBC Holdings Plc, China’s currency will account for 10 per cent of world reserves by 2025. The survey found that the yuan would make up an estimated 2.9 per cent of foreign-exchange stockpiles by the end of this year.
Of the 72 monetary authorities with $5.9 trillion in reserves that the authors of the report spoke with, 35 said they either held yuan or were considering doing so. The findings came amid calls by China for the International Monetary Fund (IMF) to include the yuan in the Fund’s fourcurrency reserve basket. According to analysts, inclusion would help the world’s second-largest economy challenge the dollar’s dominance in global trade and finance. However, another HSBC survey in the same period showed that 17 per cent of companies worldwide used the yuan to settle trades, down from 22 per cent a year earlier. The yuan fell two levels to seventh place globally among the most-used currencies in February, according to the Society for Worldwide Financial Telecommunications. The dollar and euro dominate markets, accounting for 72 per cent of the payment system. The yuan trailed the British pound, Japanese yen, Swiss franc and Canadian dollar.
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