Nigeria, West Africa's largest economy, is selling US dollars for Chinese yuan.

Nigerian Central Bank Governor Lamido Sanusi said in Beijing today that Africa's top oil exporter will convert as much as 10 percent of its $33 billion in foreign reserves from US dollars into Chinese yuan. Central banks use foreign reserves to manage their own currency's value.

In Nigeria's case, the up to $3.3 billion it may convert to yuan isn't an enormous sum – not, at least, for the oil-rich exporter. What is enormous, economists say, is what the bank's decision says: The yuan, pegged to the dollar until not long ago and managed more recently to keep Chinese exports cheap -- is turning into a global reserve currency. Africa – particularly West Africa – may be China's earliest, easiest zone of success.

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,” Sanusi said, putting his mouth where his money is.



Coming from Africa's most dollar-denominated economy – dominated by Western oil companies – his vote of confidence is “a significant win” for the yuan, said Razia Kahn, economist at Standard Chartered-Bank.



“I don't think the symbolism should be lost on anyone," she says. “The fact that you have a major African oil producer saying we're going to diversify our reserves has a significance that can't be ignored. It's a goodwill gesture in the hope that it will lead to more Chinese investment in Nigeria."



The bank, Sanusi adds, 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, also called the renminbi.

“That opens up a whole new dimension,” Ms. Khan says.



Since the end of the second World War, most international commodities – from barrels of Bahraini oil to casks of Chilean chardonnay – have been priced and sold in dollars, an advantage to US buyers, and the principal reason why dollar-conversions account for 85 percent of foreign exchange transactions in the world.



Gingerly, the world's most populous country is attempting to push its currency as a rival for commodity purchases. It will find no greater luck than in Africa, a continent flush with minerals, where China enjoys close ties, says Standard Bank researchers Simon Freemantle and Jeremy Stevens.



“We, rather conservatively, anticipate that around 40 percent of [Chinese]-African trade would be settled in renminbi by 2015,” Mr. Freemantle wrote in an e-mailed statement. That 40 percent would represent $100 billion worth of trade, more than China's entire trade with Africa last year.



If successful in Nigeria, they are likely to turn to other financial centers on the continent: South Africa, then Ghana, Angola, and Kenya.

But, in a sense, Khan says, China has already displaced the dollar in Africa's more blighted corners: Guinea, Democratic Republic of Congo, and Sudan. In each, China, is constructing mammoth infrastructure projects -- roads, railways, ports, stadiums -- in return for commodities like cobalt and bauxite.



“At the end of the day,” Khan says. “isn't all that infrastructure just a proxy for China's currency?”