einsteine:



So the capital controls are not obstacles?

Investors brought in both FDI and PI and exchanged their Forex at official rates and got a CCI in return with a guarantee that they would be allowed to repatriate profits at official rates and the CBN reneges on that and you say there are no obstacles?

The CBN subsidizes certain goods up to and including such useless things as pilgrimages and you say that's no obstacle to free trade?

Your problem is not just a lack of understanding of macroeconomics but a belief in Economic Nationalism which is sad really.

We would see in the near future if the foreign reserve would'nt be depleted by the bad economic managers of the nation

einsteine:


Your last paragraph is that a serious question?

awesomeJ:


Why are you asking a question that's had an obvious answer now? It's like asking a mother of 3, "if xyz can't have a baby, is it you that will now have one?" Open your eyes! She has three already.

Why couldn't speculators keep USD at 520 or even 400 from 2017? Your folks were confidently buying at 520 expecting to sell at 1000, for years they couldn't even sell at 400, you're asking if Nigeria survived it. Shouldn't you know your question is misdirected? Because the real question is can the speculators survive?

I've you're so confident start buying dollars tomorrow at 470, let's see where it lands you.

awesomeJ:


There's more than enough dollars to meet genuine FX obligations. And there will be for much longer time to come.

chigo4u:

You were silent when dollar rose from 360 to 470 after all your statements previously that dollar would crash latest this year and all of and sudden comes back to start making noise again because of cbn memo.
Even if the dollar crashes back to 386, speculators will still rush and buy more and the cycle continues. Whether you believe it or not the cbn will keep devaluing until the pressure on dollar reduces significantly.

Cyberknight:


Nigeria is like a wounded whale in the water giving off blood from its wounds - the sharks smell it and will always come back, no matter how you try to drive them away.

ahiboilandgas:
that mean they know they will get the dollars at 386 soon if not they will take a lost and exit at 470.......they are the one investing in tb at 1.5 percents to mark time .
.....i think going forward fpi should not be a source of forex to Nigeria.....they cause more damages or better they should have any guarantees ....

Cyberknight:


True, hot money has a lot of disadvantages.
But it generally takes advantage of structural weaknesses such as those which abound in Nigeria - for instance when the CBN was offering such wonderful interest rates on its T-bills, how could one not expect foreign portfolio investors to try to take advantage of that?

ahiboilandgas:
we need physical investment not portfolios ones ....tb should be for liquidity controls and inflations ...fpi should only invest in stocks....

chigo4u:

You were silent when dollar rose from 360 to 470 after all your statements previously that dollar would crash latest this year and all of and sudden comes back to start making noise again because of cbn memo.
Even if the dollar crashes back to 386, speculators will still rush and buy more and the cycle continues. Whether you believe it or not the cbn will keep devaluing until the pressure on dollar reduces significantly.

TotoNaRubber:

awesomeJ:


You wrote too much for just one point. The only "obstacle" you pointed out is about currency reparation.

First, it'll be flawed if your reasoning is that in a time of limited forex resources, the CBN's priority above the domestic economy is briesfcase hot monies (FPIs in case you're confused about that).

Nobody forced them to come, and they didn't come to give the money for free. They were earning 13-17%. They were aware of the potential repartriation risk, and they had the forwards market to hedge with.

They want to spend as little NGN as possible to get their USD, that's why they're waiting on the CBN. But obviously, unlike you expect, the CBN will not priotize their demand above that of the local economy, so they have to wait. Even school fees and medicals are probably treated with more priority as they should. It's only in your reasoning that proceeds of Nigerian oil should be used to settle foreigners, with Nigerians' needs ignored. Most of us think it should be Nigerians' first, and that's what the CBN is doing.

And as for FDIs, the expectation already is that they shouldn't be in as much of a hurry to run away with their money. Plus for the past three years, we've been supplying them enough to repartriate with. If they won't be patient. Dollar is available at 470. But I guess they know better than you, and would rather wait to but at 380.

So what other "obstacle" can you mention?

Cyberknight:


Nigeria is like a wounded whale in the water giving off blood from its wounds - the sharks smell it and will always come back, no matter how you try to drive them away.

einsteine:



And you conveniently skipped the issue of subsidisation of currency rates. The market has shown that people don't mind buying dollars at prices as high as 480 yet your CBN is selling it at much lower rates than that for such things as personal travel and pilgrimage (let's even forget about those who will get at cheap CBN rates and sell at the correct rates).

Any serious person knows who loses in this arrangement. If the CBN should make mistakes and offer dollars at prices cheaper than fair value, then people would swap it up and the prices would go back up. No matter of enthusiastic whining on your part can change that.

awesomeJ:


You should rather say you're ignorant, and you shouldn't be proud about it.

You only need basic school maths to understand that. If there's N10trn in investable funds, and yields are at 20% pa, the yield market would create N2trn in fresh naira supply . To help you comprehend better, buying 10trn worth if Bonds, t-bills, CPs, and OMOs at 20% yield, investors get N2trn as interest, taking the naira supply to N12trn.

On the other hand, in a 4% yield market, the same 10trn only creates 400bn in interest earnings, taking the naira supply to just 10.4trn.

I guess you're confusing SUPPLY with LIQUIDITY.

In this low yield market, what we've had is excess liquidity as investors are short of investment outlets. But Supply growth has been much slower. Even when you factor in the stimulus funds from the CBN.


Except you can explain how-according to your ignorant assertion-naira SUPPLY,(not liquidity) increases in a low yield environment, you'll have to admit that you're the one talking nonsense, and learn to polish off your ignorance.

How much do you think it was costing the CBN to manage liquidity via OMO.

You know not enough, you'll be quick to be calling something nonsense!

ahiboilandgas:
which people ? Speculators, smugglers, laundering rings , and confused and follow follow people.........genuine people like manufacturers,students , importer of legitimate goods are buying with form M and form A other bta and pta ....

einsteine:



You are wrong.

I am not going to belabor the point. If you think lowering interest rates (which would lead to increased loan books on the part of banks) leads to a decrease in Naira supply, then I have nothing further to say.

And on the part of the dollar/Naira issue, if you think 380 is the fair value for the dollar, I am willing to offer you as much naira as you want for as much dollar as you can supply at that price.

einsteine:



And you conveniently skipped the issue of subsidisation of currency rates. The market has shown that people don't mind buying dollars at prices as high as 480 yet your CBN is selling it at much lower rates than that for such things as personal travel and pilgrimage (let's even forget about those who will get at cheap CBN rates and sell at the correct rates).

Any serious person knows who loses in this arrangement. If the CBN should make mistakes and offer dollars at prices cheaper than fair value, then people would swap it up and the prices would go back up. No matter of enthusiastic whining on your part can change that.

einsteine:



What are you talking about?

Please read what you quoted because I don't understand how what you are saying and how it's appropos to my point.


By the way, yes genuine people like students are buying from the CBN and repatriating it to sell at the proper price.

einsteine:
As long as the CBN sells dollars at below fair value, people would always speculate and people would always defraud the country by "roundtripping"

awesomeJ:


If speculators rush and buy more at 386, shey they will also create another pandemic that will cut global de and for oil and crash prices terribly. cos without that, they will wait for long, as they did since 2017.

If you're honest with yourself, would you not realize that without the virus, oil would have stayed above $50 dollars for most of 2020, the airports would not have been closed, and BDCs would have still been funded?

Now we're in an exceptional situation, a d some people are having funny arguments.

If you're sure, start loading up dollars at 450 now, let's see how it goes.

ahiboilandgas:
cos naira is picked in dust bins and dollars earned .....hear ur self...

ahiboilandgas:
which people ? Speculators, smugglers, laundering rings , and confused and follow follow people.........genuine people like manufacturers,students , importer of legitimate goods are buying with form M and form A other bta and pta ....

einsteine:
As long as the CBN sells dollars at below fair value, people would always speculate and people would always defraud the country by "roundtripping"

ojesymsym:
At least we can now see that CBN has not been as stupid as some had hitherto presumed.
As Ahib has once said, they have a thinktank that run various models based on data at their disposal, the rest of us can have half baked arguments for all they care

einsteine:



And you conveniently skipped the issue of subsidisation of currency rates. The market has shown that people don't mind buying dollars at prices as high as 480 yet your CBN is selling it at much lower rates than that for such things as personal travel and pilgrimage (let's even forget about those who will get at cheap CBN rates and sell at the correct rates).

Any serious person knows who loses in this arrangement. If the CBN should make mistakes and offer dollars at prices cheaper than fair value, then people would swap it up and the prices would go back up. No matter of enthusiastic whining on your part can change that.

TransAtlanticEx:
You like to talk like you are in some fantasy land.
Who is getting what with form M?
So why is inflation rising then?
Or are you saying all those companies hiking prices for imported goods are smugglers who bought from black market?