Nigeria may adopt the Chinese Yuan as reserve currency in a bid to stop the Naira depreciation

According to The Punch, a Nigerian newspaper, the decision was the result of a proposal made in a plenary session on Wednesday by Jafaru Leko, a member representing the Bogoro/Dass/Tafawa Balewa Federal Constituency, Bauchi State.

Jafaru Leko, during his address, noted that the rate of the Naira depreciation is fast becoming a cause for concern as it affects every facet of the economy. He noted that economic instability and uncertainty are the direct results of the currency’s poor performance.

He admitted that the idea of the Central Bank diversifying the foreign exchange reserve currency was originally an idea from the International Monetary Fund, which mentioned Nigeria as a country prime to adopt the initiative.

He also noted that the idea was viable given the fact that China was taking the lead in international trade as the dynamics of the global economy continues to evolve.

“Adopting the Chinese Yuan as an additional foreign exchange reserve currency might mitigate the adverse effects of naira depreciation, reduce the risks associated with exchange rate fluctuations, and enhance Nigeria’s economic stability,” Jafaru stated.

“Furthermore, it would enhance Nigeria’s trade and economic ties with China, a crucial trading partner,” he added.

After embracing the idea, the House directed its committees on banking regulations, banking, and other ancillary institutions to communicate with the Nigerian Central Bank to investigate the necessary partnerships, policies, and mechanisms for the adoption.

The committees were also instructed to report back in four weeks with recommendations for additional legislative action.