Nigeria’s ongoing foreign exchange (FX) reforms are beginning to reshape global trade dynamics, with experts affirming that the naira’s relative stability is supporting direct currency exchanges with the Chinese yuan.
Analysts argue that the policies introduced by the Central Bank of Nigeria (CBN) have not only helped calm the volatile FX market but are also encouraging Chinese traders to accept naira in cross-border transactions, bypassing the U.S. dollar in some cases.
Speaking with journalists, Head of Agusto Consulting, Jimi Ogbobine, explained that while the naira initially suffered significant depreciation following the rollout of the CBN’s reforms, the market has since achieved a level of predictability.
“The reforms under the current CBN governor stimulated autonomous supply of foreign exchange into the economy.
The naira took a hit at first but has since stabilized within a fairly predictable band,” Ogbobine said.
He emphasized that what investors and market participants want is not necessarily a strong naira, but a stable one.
“Even if the naira is weak, stability makes planning easier for businesses. This stability is what has encouraged Chinese traders to deal more in yuan-naira exchanges,” he added.
China remains Nigeria’s largest trading partner, with imports ranging from electronics to industrial machinery.
Traditionally, most of these transactions have been dollar-denominated, but the yuan’s growing role is seen as part of a broader strategy to reduce Nigeria’s dependency on the U.S. dollar.
Economist and CEO of Economic Associates, Dr. Ayo Teriba, however, maintained that the naira’s value against the dollar remains the ultimate benchmark.
He noted that the currency’s stability this year was only threatened when global markets reacted to U.S. trade tariff announcements.
“As long as global markets are calm and Nigeria’s reserves are healthy, the naira will remain stable.
What matters most is naira-dollar stability because it influences all other cross-currency trades, including the yuan,” Teriba said.
Senior Market Analyst at FXTM, Lukman Otunuga, pointed out that the naira has kicked off September as one of the best-performing African currencies.
According to him, it has gained 0.5% against the U.S. dollar and 0.8% against the yuan.
“This trend is partly due to growing confidence in the local currency amid reports that Chinese traders now collect naira directly for yuan.
The renewal of the $2 billion Nigeria-China currency swap in late 2024 has also streamlined bilateral trade, reducing reliance on the dollar,” Otunuga stated.
He further highlighted that improved fiscal performance, rising non-oil revenues, and CBN interventions have strengthened the naira’s position.
With Nigeria projected to post 3.6% GDP growth in Q2 2025, compared to 3.13% in the previous quarter, market sentiment is expected to remain positive.
Backing the FX reforms, the Director-General of the Budget Office, Tanimu Yakubu, said the naira’s float and unification of FX windows have restored investor confidence and boosted exports.
“Increased oil receipts, stronger remittances, and the clearing of over $4 billion in FX backlogs have rebuilt trust.
The unified exchange rate made Nigerian goods cheaper globally, spurring a nearly 20% rise in non-oil exports year-on-year,” Yakubu explained.
He added that exporters are now reinvesting profits into value-added processing, turning raw commodities like cocoa and sesame into higher-value products.
This, in turn, pumps more foreign exchange into Nigeria’s reserves, further stabilizing the naira.
Global and Domestic Implications
Experts agree that while Nigeria’s currency is not internationally traded, predictable exchange rates encourage investors. For Chinese companies especially, stability in naira-dollar parity makes it easier to conduct yuan-naira transactions without added risk.
However, risks remain. Teriba warned that sudden global shocks—such as tariff wars or oil market disruptions—could once again push the naira to extreme levels, threatening the fragile balance.
Despite these concerns, optimism persists. With increased remittances, rising capital inflows, and strong policy direction, Nigeria is gradually repositioning its currency as a reliable medium for trade with major partners like China.
As Nigeria continues to deepen its currency reforms, the yuan-naira trade corridor may grow stronger, reducing dollar dominance in bilateral trade.
Experts believe that if current reforms are sustained and global conditions remain stable, the naira could maintain its newfound credibility, offering businesses greater certainty and driving foreign investment into Africa’s largest economy.