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Nigeria to convert 10% of its $33b foreign reserves from US dollars into Chinese yuan

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Sanusi Lamido Sanusi - Nigeria Central Bank governor

Governor of the Nigerian Central Bank, Mr. Lamido Sanusi has disclosed that Nigeria will convert some of its foreign reserves from US dollars to the Chinese yuan.

Mr Sanusi who made this known during a recent trip to Beijing, China, according to the Christian Science Monitor said it “will convert as much as 10% of its $33 billion in foreign reserves from US dollars into Chinese yuan.”

This means up to $3.3 billion will be converted into yuan and the central bank will use the foreign reserves to manage its own currency’s value.

According to the publication, Sanusi explained that the rise of China’s yuan as a global currency – trusted by central banks, accepted by finance ministries, routinely used to purchase raw goods – is “inevitable”.

He adds that is likely to orchestrate a currency swap with China, which would allow the Asian power to conduct more of its Nigeria dealings in its own currency.

But Mr Alhassan Andani, Managing Director of Stanbic Bank Ghana says Ghana must not rush with the decision to invest part of its foreign reserves into the Chinese Yuan.

“It is too early and premature for Ghana to consider such calls to put some of its reserves in the yuan,” Mr. Andani told the Ghana News Agency in Accra.

According to the GNA Mr Andani said “the trade in the Yuan has been doing well and helping traders to meet their currency demands through our correspondence bank in China but cautioned that the country must first weigh the economic implications of any such move.”

Ghana’s gross international reserves (GIR) is $4.5 billion as at August 19, 2011, equivalent to 3.5 months cover of imports of goods and services, according to the Bank of Ghana (BoG).

However, the International Monetary Fund (IMF) wants the BoG to beef up its international reserves.

The Chinese yuan is gradually turning into a global reserve currency and with trade relations with African countries its currency may be a success in West Africa in particular.

By Ekow Quandzie

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