A prominent issue currently engaging the intellect of economic analysts is the proposed currency swap between the Nigerian Naira and Chinese Yen. In my University social media forum it has provoked intense debate. Currency swap is intended to mitigate the restrictions on trade caused by the non availability of trading currency and foreign exchange fluctuation.
It was to overcome these restrictions that Nigeria opted for counter trade in the past. Counter trade is simply the exchange of goods and services between countries. It achieves the same purpose as the currency swap.
With this bilateral currency swap, a country can exchange its currency for a certain volume of foreign currency.
Naira will be provided for Chinese business men and this will be complemented by the supply of Yen to Nigerian businessmen. It will overcome most restrictions to trade and enhance its volume. Since sourcing for the naira will no more be a problem, the Chinese will now be encouraged to increase their trading and investment activities in the Nigerian economy. I have reservations about the currency swap policy but some of my friends are so excited by it. They loathed my idea that cheap but inferior Chinese products should not be allowed to flood the Nigerian market. Their faith lies in the fact that Chinese products are available and affordable.
They have been enjoying their cheap rechargeable lamps and torch lights. The ladies among them have ionic bonding with Chinese products. But when I suggested to them to replace their wedding rings with Chinese rings they all declined. They knew it would break and the marriage would collapse. Read more