Why Chinese Traders are Ditching the US Dollar for the Naira

The recent appreciation of the Naira against the US dollar is being driven by a surprising factor: a growing number of Chinese traders are now choosing to conduct business in Naira instead of the dollar. This is according to Aminu Gwadabe, the President of the Association of Bureau De Change Operators (ABCON), who says this shift is a direct result of a renewed currency swap deal between Nigeria and China.

The bilateral currency swap agreement, sealed in December 2024 and valued at ₦3.28 trillion (15 billion yuan), has created a direct pathway for trade without the need for a third currency like the US dollar. Gwadabe noted that Chinese investors in Nigeria's mining sector and other industries are increasingly using peer-to-peer (P2P) transactions to exchange Naira directly for Yuan. This means that a Nigerian importer can now get Yuan with Naira to pay for goods from China, completely bypassing the need for dollars.

"The Chinese are now accepting naira for yuan through peer-to-peer (P2P) transactions," Gwadabe stated. "Visit any mining factory, and you’ll find Chinese nationals conducting business directly in naira."

This development is a significant boost for the Naira, as it reduces the demand for dollars, which has traditionally been the dominant currency for international trade. The trend supports the recent comments by presidential spokesperson Bayo Onanuga, who declared that the US dollar is "no longer a king over the Naira." By encouraging direct currency transactions, the swap deal is helping to stabilize the Naira and strengthen Nigeria's economic ties with one of its largest trading partners.