Bloomberg reported in 2018 that ‘Nigeria and China agreed on a cross-currency swap worth $2.4 billion to boost commercial ties and reduce the need to use the dollar in bilateral trade’

Posted: January 10th, 2022

Bloomberg reported in 2018 that ‘Nigeria and China agreed on a cross-currency swap worth $2.4 billion to boost commercial ties and reduce the need to use the dollar in bilateral trade’. Explain how a cross-currency swap can help these two parties achieve this goal. (LO 21.3)

Outline the main features of a cross-currency swap. Include in your answer a discussion of the differences between an interest rate swap and a cross-currency swap. (LO 21.3)