Very simple economics. We buy most of our goods from China, so why must we pay the Chinese in dollars? The Chinese buy a lot of crude oil from us, so why must they pay us in dollars?
So PMB made a deal with the Chinese. We pay for the goods we buy from China in Yuan, the Chinese currency. They buy our crude oil and pay in Yuan.
The exchange rate is to be pegged at 30 Naira to one Yuan or RMB.
So how does it favour us? Simple.
The Yuan is now 6.48 to a dollar. So if you pay 30 Naira to the Yuan, that would be equivalent to 194.4 Naira to the dollar.
Since the dollar exchanges for 199 Naira, you save N4.6. 199 – 194.4 = 4.6. Simple, huh?
In simple terms, PMB has just strengthened the Naira by 9.15%!
And that’s not the end of the story. As we begin to deal in the Yuan, the demand for dollar would plummet and this in turn would weaken the dollar.