So I saw a thread earlier about JP Morgan predicting the Naira to come down to 850 by December. Here is the link to that thread: https://www.nairaland.com/7898416/jp-morgan-projects-n850-december

Now this is why I don't believe anything from JP Morgan. In June, they predicted that the Naira will come down to 600 against the dollar and look at where it is today. Here is the link to that news: https://www.thecable.ng/naira-to-appreciate-settle-at-n600-1-in-coming-months-says-jp-morgan

If you trade Forex, you know what Overbought and Oversold is. That's what is currently happening. When the price gets to overbought, it will crash down, but doesnt mean it will continue to go down. It might just rise up again, and this time, the rate at which it will increase will be surprising.

If the govt injects the 10 billion USD they are expecting from God-Knows-Where, it might help stabilize the Naira a little, but then, it won't be permanent. Here is the link to that News: https://www.bloomberg.com/news/articles/2023-10-23/nigeria-sees-10-billion-inflows-easing-forex-liquidity-crunch

The only permanent solution to this is to earn more money through export and/or reduce importation drastically.

Since we spend huge amounts of money importing refined oil, getting our refineries to work (or Dangote Refinery) will help stabilize the Naira since we can produce our oil locally and consume what we produce and perhaps have more left to export to other countries who need refined oil.

But how is that even possible when Dangote is complaining that he cannot get crude oil in Nigeria because Nigeria govt is currently using our crude to pay debts. Now he has to import crude. Here is the link to that one: https://punchng.com/dangote-refinery-imports-crude-as-nnpcl-swaps-oil-for-loans/. Now Dangote said if he continues to import crude to refine, then he wont sell to Nigerians in Naira. Now Nigerians have to go hustle to exchange their Naira to dollar again to buy from Dangote bringing us back to square one. Naira will continue to fall.

They said they are fixing some refineries but we are not seeing any greenlight. All seems to be lies.

If they can fix like 3 refineries and get them to work, provide enough crude for Dangote to refine, we will be just fine. But this looks like its never going to happen.

See, my tired is tired.

U try

saasala:
So I saw a thread earlier about JP Morgan prediction the Naira to come down to 850 be December. Here is the link to that thread: https://www.nairaland.com/7898416/jp-morgan-projects-n850-december

Now this is why I don't believe anything from JP Morgan. In June, they predicted that the Naira will come down to 650 against the dollar and look at where it is today. Here is the link to that news: https://www.thecable.ng/naira-to-appreciate-settle-at-n600-1-in-coming-months-says-jp-morgan

If you trade Forex, you know what Overbought and Oversold is. That's what is currently happening. When the price gets to overbought, it will crash down, but doesnt mean it will continue to go down. It might just rise up again, and this time, the rate at which it will increase will be surprising.

If the govt injects the 10 billion USD they are expecting from God-Knows-Where, it might help stabilize the Naira a little, but then, it won't be permanent. Here is the link to that News: https://www.bloomberg.com/news/articles/2023-10-23/nigeria-sees-10-billion-inflows-easing-forex-liquidity-crunch

The only permanent solution to this is to earn more money through export and/or reduce importation drastically.

Since we spend huge amounts of money importing refined oil, getting our refineries to work (or Dangote Refinery) will help stabilize the Naira since we can produce our oil locally and consume what we produce and perhaps have more left to export to other countries who need refined oil.

But how is that even possible when Dangote is complaining that he cannot get crude oil in Nigeria because Nigeria govt is currently using our crude to pay debts. Now he has to import crude. Here is the link to that one: https://punchng.com/dangote-refinery-imports-crude-as-nnpcl-swaps-oil-for-loans/. Now Dangote said if he continues to import crude to refine, then he wont sell to Nigerians in Naira. Now Nigerians have to go hustle to exchange their Naira to dollar again to buy from Dangote bringing us back to square one. Naira will continue to fall.

They said they are fixing some refineries but we are not seeing any greenlight. All seems to be lies.

If they can fix like 3 refineries and get them to work, provide enough crude for Dangote to refine, we will be just fine. But this looks like its never going to happen.

See, my tired is tired.

Well said... But this is talky the time to sell off your dollars and re-buy when the temporary crash happens.

By the way, it is happening already

dawnomike:
Well said... But this is talky the time to sell off your dollars and re-buy when the temporary crash happens.

By the way, it is happening already

its already happening, so why sell off when it will find its way back soon. That will be panic selling. Panic selling is bad.

Too much book dey worry you.

Why dem no kuku make you minister for finance abi make you sha be one important part of the govt.

samtoles:
Too much book dey worry you.

Why dem no kuku make you minister for finance abi make you sha be one important part of the govt.

No overhype me bro. I no get sense reach that level. Its what everyone can see.

saasala:
So I saw a thread earlier about JP Morgan predicting the Naira to come down to 850 by December. Here is the link to that thread: https://www.nairaland.com/7898416/jp-morgan-projects-n850-december

Now this is why I don't believe anything from JP Morgan. In June, they predicted that the Naira will come down to 600 against the dollar and look at where it is today. Here is the link to that news: https://www.thecable.ng/naira-to-appreciate-settle-at-n600-1-in-coming-months-says-jp-morgan

If you trade Forex, you know what Overbought and Oversold is. That's what is currently happening. When the price gets to overbought, it will crash down, but doesnt mean it will continue to go down. It might just rise up again, and this time, the rate at which it will increase will be surprising.

If the govt injects the 10 billion USD they are expecting from God-Knows-Where, it might help stabilize the Naira a little, but then, it won't be permanent. Here is the link to that News: https://www.bloomberg.com/news/articles/2023-10-23/nigeria-sees-10-billion-inflows-easing-forex-liquidity-crunch

The only permanent solution to this is to earn more money through export and/or reduce importation drastically.

Since we spend huge amounts of money importing refined oil, getting our refineries to work (or Dangote Refinery) will help stabilize the Naira since we can produce our oil locally and consume what we produce and perhaps have more left to export to other countries who need refined oil.

But how is that even possible when Dangote is complaining that he cannot get crude oil in Nigeria because Nigeria govt is currently using our crude to pay debts. Now he has to import crude. Here is the link to that one: https://punchng.com/dangote-refinery-imports-crude-as-nnpcl-swaps-oil-for-loans/. Now Dangote said if he continues to import crude to refine, then he wont sell to Nigerians in Naira. Now Nigerians have to go hustle to exchange their Naira to dollar again to buy from Dangote bringing us back to square one. Naira will continue to fall.

They said they are fixing some refineries but we are not seeing any greenlight. All seems to be lies.

If they can fix like 3 refineries and get them to work, provide enough crude for Dangote to refine, we will be just fine. But this looks like its never going to happen.

See, my tired is tired.

Thanks for your writeup but you provide an over simplistic view of the problem and also the solution.

Your belief that salvation will only come once the country start refining its crude oil locally rather than import it would resolve the issue isn't true.

The scarcity of forex began when Buhari assumed office. He pegged the Naira at around N199 to a dollar. He famously said I do not believe in devaluation. He had no right to fix the exchange rate. Secondly, he fixed it at a rate that did not reflect its market value. The rate he always chose at any time was an overvalued rate. Because the Naira was overvalued, demand for the dollar was greater than the supply. It meant more dollars was going out than coming in. In time, this ran down the foreign reserves.

In May 2015, the foreign reserves were $28.5bn. It is estimated that it is presently under $4bn. Emefiele had been lying to the country that it was around $30bn.

So simply refining oil locally would not resolve the dollar probably. That was not what caused the scarcity in the first place. The Naira needs to be traded at a rate that reflects the market value so that history would not repeat itself.

Dangote's is not being honest in his whining that the NNPC won't sell him crude. With NNPC owning a 20% stake in his refinery, that would be stupid. His refinery is not complete and the only product his refinery can supply in its present state will be the type of diesel the illegal refineries produce. It won't be good for use. I doubt Dangote has the funds to complete the refinery.

Two things can reduce pressure on the foreign reserves and the Naira. One is to ensure the Naira value reflects market realities. Better yet, make it a bit undervalued. That was the secret Charles Soludo used to build the foreign reserves to $60bn. This would reduce demand for dollars, and a weaker Naira increases inflows

Also, the fuel subsidy must not only be removed, but the price, deregulated just like as been done with kerosene and diesel. This may be the biggest pressure on the Naira.

There are other ways to draw forex into the country. Presently, the CBN runs a loose monetary policy. Its interest rate of 18.75% is below the inflation rate of 25% or so. That means interests are at a -6.25%. It has to hit around the inflation rate of 25%. At such a rate, monetary policy starts being tight and money would flow into bonds, reducing liquidity in the system and thereby reducing demand for forex. It would also encourage the inflow of FX through portfolio investment. This is global best practice. It is not an option. The present loose monetary policy is the biggest reason for the high inflation plaguing the country and not even the scarcity of FX.

The last paragraph is very important. Many economist have demanded for it but it seems the CBN is either dilly dallying or Tinubu does not want it. He wants low interest rates but the low interest rates he wants is fuelling inflation, Naira depreciation and may discourage the inflow of dollars into the system.

You can't have your cake and eat it. Just ask the Turkiye's president, Recep Erdorgan

grandstar:


Thanks for your writeup but you provide an over simplistic view of the problem and also the solution.

Your belief that salvation will only come once the country start refining its crude oil locally rather than import it would resolve the issue isn't true.

The scarcity of forex began when Buhari assumed office. He pegged the Naira at around N199 to a dollar. He famously said I do not believe in devaluation. He had no right to fix the exchange rate. Secondly, he fixed it at a rate that did not reflect its market value. The rate he always chose at any time was an overvalued rate. Because the Naira was overvalued, demand for the dollar was greater than the supply. It meant more dollars was going out than coming in. In time, this ran down the foreign reserves.

In May 2015, the foreign reserves were $28.5bn. It is estimated that it is presently under $4bn. Emefiele had been lying to the country that it was around $30bn.

So simply refining oil locally would not resolve the dollar probably. That was not what caused the scarcity in the first place. The Naira needs to be traded at a rate that reflects the market value so that history would not repeat itself.

Dangote's is not being honest in his whining that the NNPC won't sell him crude. With NNPC owning a 20% stake in his refinery, that would be stupid. His refinery is not complete and the only product his refinery can supply in its present state will be the type of diesel the illegal refineries produce. It won't be good for use. I doubt Dangote has the funds to complete the refinery.

Two things can reduce pressure on the foreign reserves and the Naira. One is to ensure the Naira value reflects market realities. Better yet, make it a bit undervalued. That was the secret Charles Soludo used to build the foreign reserves to $60bn. This would reduce demand for dollars, and a weaker Naira increases inflows

Also, the fuel subsidy must not only be removed, but the price, deregulated just like as been done with kerosene and diesel. This may be the biggest pressure on the Naira.

There are other ways to draw forex into the country. Presently, the CBN runs a loose monetary policy. Its interest rate of 18.75% is below the inflation rate of 25% or so. That means interests are at a -6.25%. It has to hit around the inflation rate of 25%. At such a rate, monetary policy starts being tight and money would flow into bonds, reducing liquidity in the system and thereby reducing demand for forex. It would also encourage the inflow of FX through portfolio investment. This is global best practice. It is not an option. The present loose monetary policy is the biggest reason for the high inflation plaguing the country and not even the scarcity of FX.

The last paragraph is very important. Many economist have demanded for it but it seems the CBN is either dilly dallying or Tinubu does not want it. He wants low interest rates but the low interest rates he wants is fuelling inflation, Naira depreciation and may discourage the inflow of dollars into the system.

You can't have your cake and eat it. Just ask the Turkiye's president, Recep Erdorgan

Thanks for schooling me bro. I appreciate. Now I understand a lot.

saasala:


its already happening, so why sell off when it will find its way back soon. That will be panic selling. Panic selling is bad.

It all depends on the type of trader you arè.
For me, I swìng both ways to maximize profit.