In a bid to reduce dollar use within the West African region and stop consequent depreciation of national currencies, the Governor of Bank of Sierra Leone who doubles as the Chairman of the ECOWAS Committee of Governors of Central Banks, Professor kelfala kallon, has disclosed a plan for currency swap between Nigeria and Sierra Leone.
In a statement by Nigerian Investment Promotion Commission Intelligence (NIPC), quoting Sahel Standard, the bank of Sierra Leone chief who spoke about efforts made to integrate Nigeria and Sierra Leone economies, said Sierra Leone has decided to go ahead with the swap policy with Nigeria as its leading economic partner.
Kallon, who noted that the Sierra Leonean financial sector is dominated by Nigerian banks and institutions , said the policy would benefit both countries by removing dollar as a factor in the trade between both countries.
“We are engaged in deep discussions with my brother, Godwin Emefiele, and we are forming the plan and will take the plan further. Since Nigeria already has a currency swap arrangement with China, Sierra Leone will key into that arrangement. Sierra Leonean import from China can now be done with Naira.This is why we are really interested in the immediate swap deal between Nigeria and Freetown”, the bank Chief said.
Kallon stated: “For instance, a Sierra Leonean trader coming to Conakry would go into the parallel foreign exchange market in Sierra Leone to acquire dollars (at a premium, most times) to bring to Conakry to convert into Guinean francs (mostly at a discount) in order to purchase her wares.
“This transaction then increases the demand for dollars in Sierra Leone and its supply in Guinea. The result would be a depreciation of the Leone against both the dollar and the Guinean franc and the appreciation of the Guinean franc against both the Leone and the dollar. When the transaction is reversed (with a Guinean trader going to Freetown to purchase rice, for example), the fortunes of the Leone and Guinean franc would be reversed relative to each other and to the dollar.