The real price of something is N750 but due to no change its priced at N1000. You buy 30 such items per month. Your loss is N7500. Same with N500 note. The real price of something is N400 or N450 due to no change its made N500. You lose money when you buy 40 such items per month. You lose N2000

Na wa ooh.

Higher notes are printed because to curb inflation

thebosstrevor1:
Na wa ooh.

Higher notes are printed because to curb inflation

It doesn't curb inflation - the examples I've given shows it FUELS inflation

BigBashiru:


It doesn't curb inflation - the examples I've given shows it FUELS inflation

So how are we sure you are right because i see no valid point you made

Two #500 is still equal to #1000

thebosstrevor1:


So how are we sure you are right because i see no valid point you made

It's self explanatory.... prices in Nigeria are tending towards N1,000 N10000 N100000 because of N1000 note. A lot of times its due to a psychological bias for rounded values....

N1000 note is responsible for at least 30% of the economic hardship in Nigeria. If N1000 note is removed from circulation most things would be forced to reprice

BigBashiru:


It's self explanatory.... prices in Nigeria are tending towards N1,000 N10000 N100000 because of N1000. A lot of times its due to a psychological bias for rounded values....

N1000 is responsible for at least 30% of the economic hardship in Nigeria.

Not always true.

A country experiencing high levels of inflation introduces higher denominations or re-denominates in order to meet the higher demand for currency.

Many products are not round figures especially when you buy them from the wholesalers.

You claim the real price of something is 750, why round it up to 1000 when it can be easily rounded up to 800

thebosstrevor1:
Na wa ooh.

Higher notes are printed because to curb inflation

No one can fault the op’s point because it plays out before our very own eyes in EVERY market sector,

thebosstrevor1:


Not always true.

A country experiencing high levels of inflation introduces higher denominations or re-denominates in order to meet the higher demand for currency.

Many products are not round figures especially when you buy them from the wholesalers

At your second paragraph: I contend politely that's it's not true.... inflation is a function of demand and supply in a market.... a higher currency note plays to greed.... people will always want N1000. Also what is common loses its value they say. The N1000 note is COMMON so it has lost its value. But in UK for example £50 note isn't common and it has a lot of value just because it's not common

thebosstrevor1:


Not always true.

A country experiencing high levels of inflation introduces higher denominations or re-denominates in order to meet the higher demand for currency.

Many products are not round figures especially when you buy them from the wholesalers

“ . . . especially when you buy from wholesalers”. Well, you might want to know that over 70% of Nigerians in Nigeria live on less than a dollar a day and a higher proportion have less than N500k in their bank accounts so most Nigerians won’t be dealing regularly with wholesalers anytime soon.

BigBashiru:


At your second paragraph: I contend politely that's it's not true.... inflation is a function of demand and supply in a market.... a higher currency note plays to greed.... people will always want N1000. Also what is common loses its value they say. The N1000 note is COMMON so it has lost its value. But in UK for example £50 note isn't common and it has a lot of value just because it's not common

I see. I think i understand your logic, greed, cheating and the lies of no change increases the cost of goods and services thus causing inflation.

That means price control need to be reinforced to reduce inflation or should the government made the little denomination more available?

thebosstrevor1:


Not always true.

A country experiencing high levels of inflation introduces higher denominations or re-denominates in order to meet the higher demand for currency.

Many products are not round figures especially when you buy them from the wholesalers.

You claim the real price of something is 750, why round it up to 1000 when it can be easily rounded up to 800

@ your last paragraph - the answer is greed.... I can round to N1000 because the note is available and it is more profitable for me to do so! Also the buyer is likely have N1000 or 2 N500 than four N200 notes these days!

The probability of rounding to N800 is higher if the N1000 note isn't there.

So we are in agreement here....

Yeye logic

Let me burst your myth for you.

Okay. 1000 Naira note is scrapped. But then, two 500 notes is 1000 Naira, and five 200 Naira notes equals 1000 Naira. This should also sustain increased inflation as suggested by your shallow poor researched economics. Scrap all currencies then

RedPhoenix:
Yeye logic

Let me burst your myth for you.

Okay. 1000 Naira note is scrapped. But then, two 500 notes is 1000 Naira, and five 200 Naira notes equals 1000 Naira. This should also sustain increased inflation as suggested by your shallow poor researched economics. Scrap all currencies then

The very fact you have to count 2 N500 to get a thousand automatically gives the N1000 more value from a psychological perspective....

"Scrap all currencies then" - I won't go that far....

thebosstrevor1:


I see. I think i understand your logic, greed, cheating and the lies of no change increases the cost of goods and services thus causing inflation.

That means price control need to be reinforced to reduce inflation or should the government made the little denomination more available?

Exactly. And that removal of N1000 note is a means of price and inflation control.

Also having to count 5 N200 to get a thousand psychologically gives a thousand more value... these days ppl spray N1000 note at weddings!

BigBashiru:


@ your last paragraph - the answer is greed.... I can round to N1000 because the note is available and it is more profitable for me to do so! Also the buyer is likely have N1000 or 2 N500 than four N200 notes these days!

The probability of rounding to N800 is higher if the N1000 note isn't there.

So we are in agreement here....

But a very competitive retailer can beat down the price of all the goods in a market.

For instance if the real price is 750 and others round theirs to 1000, the retailer can decide to round his to 850 thus making his own goods cheaper and this too can bring other competing retailers price down.

On another thought, the rounding up of figures kinda of encourage price haggling.

thebosstrevor1:


But a very competitive retailer can beat down the price of all the goods in a market.

For instance if the real price is 750 and others round theirs to 1000, the retailer can decide to round his to 850 thus making his own goods cheaper and this too can bring others competing retailers price down.

On another thought, the rounding up of figures kinda of encourage price haggling.

As a retailer you need to have enough N50 notes to be giving change to all customers in a business day.... atms disburse N1000 note not N50 note so there is more N1000 note in circulation....

Because it takes a lot of work to arrange N50 change to customers daily (you need to liaise with your bank) and atms disburse more N1000 note and no N50.... it's easier to work with N1000 note.....

So it's unlikely the scenario you paint will play out

BigBashiru:


As a retailer you need to have enough N50 notes to be giving change to all customers in a business day.... atms disburse N1000 note not N50 note so there is more N1000 note in circulation....

Because it takes a lot of work to arrange N50 change to customers daily and atms disburse more N1000 note and no N50.... it's easier to work with N1000 note.....

So it's unlikely the scenario you paint will play out

The atm is also a problem, i too was wondering why lower denomination wasn't coming out from the atm machine. It is weird you know, the banks are not thinking about the inflation risk but customer convenience

Atleast atm needs to be dispensing more lower denomination like from 50 naira above, it will help curb inflation.

....

thebosstrevor1:


The atm is also a problem, i too was wondering why lower denomination wasn't coming out from the atm machine. It is weird you know, the banks are not thinking about the inflation risk but customer convenience

Atleast atm needs to be dispensing more lower denomination like from 50 naira above, it will help curb inflation.

Exactly!! Maybe the N1000 note should not be scrapped completely but at least ATMS should be dispensing N500 and N200 and N1000 only once in a while....

BigBashiru:


Exactly!! Maybe the N1000 note should not be scrapped completely but at least ATMS should be dispensing N500 and N200 and N1000 only once in a while....

To create scarcity for the high denomination notes makes sense. Also bring back coins

BigBashiru:
The real price of something is N750 but due to no change its priced at N1000. You buy 30 such items per month. Your loss is N7500. Same with N500 note. The real price of something is N400 or N450 due to no change its made N500. You lose money when you buy 40 such items per month. You lose N2000

What do you mean by "Due to no change"? Are there no smaller dominations of Naira in circulation?

Dedetwo:


What do you mean by "Due to no change"? Are there no smaller dominations of Naira in circulation?

if you are setting up a super market or if you are in the open market, you will need to set the price of your items, if you price N950 and you are always having to provide N50 change you will sooner or later be tempted to just make the price N1000 to make things easier....simply because the note is available but if the N1000 note isnt available then we value the N50 more in this example....

Supermarkets that price N550 N650 are hoping the total will be a multiple of N1000 so there's no need to find N50 change.

Wonder why d dollar is universal strong? Cos it's highest denomination is $100

phrancys001:
Wonder why d dollar is universal strong? Cos it's highest denomination is $100

Great point! And the £ is stronger than USD and it's highest denomination is £50....

The only solution is for our government to introduce back coins. Developed countries still spend coins.Coins are meant for buying things like sweet, biscuits and so on... But now u can buy a biscuit with out spending #10 minimum. We need to revisit this back. Our leaders knows that but due to their selfish and greedy interest. They scrap coins. Thanks

Op might be secondary school student.

sirk98:
The only solution is for our government to introduce back coins. Developed countries still spend coins.Coins are meant for buying things like sweet, biscuits and so on... But now u can buy a biscuit with out spending #10 minimum. We need to revisit this back. Our leaders knows that but due to their selfish and greedy interest. They scrap coins. Thanks

I agree! Coins need to be reintroduced.

BigBashiru:


if you are setting up a super market or if you are in the open market, you will need to set the price of your items, if you price N950 and you are always having to provide N50 change you will sooner or later be tempted to just make the price N1000 to make things easier....simply because the note is available but if the N1000 note isnt available then we value the N50 more in this example....

Supermarkets that price N550 N650 are hoping the total will be a multiple of N1000 so there's no need to find N50 change.

Sometimes they offer you sweet and chewing gum for that 50 naira because there's no change.

juman:
Op might be secondary school student.

It's good that he's trying to get information.

Post from a junkie

Worosiworo economist

sirk98:
The only solution is for our government to introduce back coins. Developed countries still spend coins.Coins are meant for buying things like sweet, biscuits and so on... But now u can buy a biscuit with out spending #10 minimum. We need to revisit this back. Our leaders knows that but due to their selfish and greedy interest. They scrap coins. Thanks

Coins are made from zinc, copper and bronze sometimes, these metals are expensive. Therefore making a 1 kobo coin will cost more than 1 kobo. This is also the reason CBN doesn't print N5 anymore.


But I agree with what you said, printing lower denomination currencies like N100 and N200 will also make it difficult for inflation and to loot money.

Suppose a thief wants to steal N1 million naira, he can request N1000 notes into 1,000 pieces. This will be easy to carry.


Now if the bank gave him N100 denominations only, for him to collect 1 million he needs 10,000 pieces. This is the size of an Oxford dictionary, making it more difficult to transport.