The central bank of Nigeria opts for Chinese currency reserves

The central bank of Nigeria opts for Chinese currency reserves

China is definitely on course to diversify its immense currency reserves by reducing its buying-up of American Treasury Bonds. The Wall Street Journal commented: “This is not the end of the world from an American perspective”. Lately China has diversified some of its holdings in solid gold. We have already reported that the Chinese currency is used as a trade currency in the Far East

Now there is another new aspect to report, Nigeria’s central bank has added the equivalent of USD 500 million in Chinese CNY thus representing only 1.4 % of its total reserves but that is not the end since the bank plans to gradually increase CNY holdings to 10 % of its USD 35 billion reserves.

Since China is a trade and investment force in Africa there will be probably other central banks following the example of Nigeria. And also some Latin America central banks might follow the pack, especially the countries dealing in oil and other commodities with China.

This proves that China is on the move to establish its currency outside of China and it demonstrates the strong trade position of China worldwide.

It is worth mentioning in this context that China Investment Corp. (CIC) – sovereign wealth fund – has been receiving a capital infusion of USD 30 billion from Chinese government already at the end of last year but it became known only now. CIC was founded 2007 and was originally provided with USD 200 billion from the Chinese currency reserves. At the end of 2010 (latest figure available) its assets grew to USD 410 billion.

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