busomma:
The banks are not helping matters as a matter of fact. I am in Washington DC as I write this. I withdrew $200 from bank of America @ the rate of N277.8/$ against official rate of N199/$.

All man de blame BDC...I just de laf. Lets see how many days this latest directive lasts.

Shey the 41 items that their importers can't acces $ from CBN go still de import? Na the masses go pay.

Again, I laf.

unite4real:


We need to know this bank and make some noise. That's very bad

Bank of America.

diva90:
This won't stop BDCs from operating because they will surely find a way to get dollars. However black market will be extremely expensive to buy as I suspect that with this ban, naira to dollar exchange will be about N300+/$ soon

Your head de there joor. Anyway, lets see how they scrutize and manage the sources BDCs get their dollar from.

We watching.

Ngalaba1:
This is really going to be a problem for Importers... I imagine what they would be going through now...

Fund your domiciliary accounts directly.

akin003:
I was gonna quote some one, but so her head won't swell


I'm not an economist or anything but based on what I think is obvious, there are multiple factors at play, albeit with its own cause and effect result.
While the official exchange rate has been pegged at #197( whether this is right or not, I can't say), BDC aren't selling at this rate, they make margins of #60/70 on a dollar which is robbery. CBN stopping sales to BDC means they have to sort elsewhere ('autonomous' I wonder where/who that is ), bottomline is, no free meal for the BDC as no #197 again. This might cause an increase on d black market but it won't last, majorly because banks would now trade dollars (for legitimate reasons only). Importers who the major people in need of the dollar would boycott entirely the BDC's meaning less demand for their own dollars.
Also those that have stockpiled dollars in vaults would likely bring them out in the short term, which would likely crash the price in the black market further.
I think the bottom line is this, the dollar isn't our currency, why the heck are we so keen on having it (as Nigerians in general) even as non importers.
Time would tell though, but I am fairly confident nobody as a one stop solution to fix this problem... I would take CBN govs adaptability and flexibility over those shouting devaluation as the only solution. As time goes on, the CBN would evolve better strategies to fix the loopholes generated by each policy while we pray for better oil prices in 2016.

At the end of the day, oil prices still hover around $35/barrel. That's the real nsogbu.

Sadly, harder times beckon.

bookface:


Government bonds for one - If you can ask your broker about this. If you can get rates closer to 12 or 13 %, this should help you beat inflation which is currently at 9% by about 3% per annum.

Properties, is probably still a good idea, although i don't like this idea very much because they are illiquid investments and would not return as much value as the first option in this case. Nigerian properties at the moment are overvalued. The best rental yield you would probably get from your investment is about 3-5% even in prime areas like Lagos and Abuja. Which is well below inflation rate at 9% and well below government bond yields at 13%.

Finally, if you are into stocks, you could consider a buy and hold strategy - but with a very long term view. In the short term (about 2 to 3 years) stocks will probably underperform, if current economic situation worsens. However, in the longer term, you would probably make a lot of money from holding some stocks in your portfolio. You should stay away from oil and gas stocks such as the likes of Oando - stay away from banks with bad corporate governance (especially banks with large un-collateralized loans to the oil and gas industry) - you can buy company stocks like 7Up, Coca Cola, Maggi, Cement etc.

The best approach is holding each of this items in your portfolio, and having a diversified portfolio holding

In either case, there is nothing worse than simply holding cash in your bank account. You lose 9% of the value of that cash every year.

You should be careful though, there are enough scammers out there, talk to your broker if you have one, and ask about each of the items i have listed above

I approached the bank and they refused selling Treasury bills (that rates are bad) and tried talking me into Fixed Deposits (so I walked away). Some of my shares have been cashed out but I've been thinking Dangote Cement won't be a bad idea. I believe I already have NBC or Coca-Cola.

Can I pm you please?

this is super cool... those greedy ppl are the reason why the dollar is where it is...You buy @ 197 and you sell at 280....They are not above Nigeria and should not be above regulations.... Nigeria go better

realborn:
Very detailed and well written communique.

Summary:

- If the CBN continues to sell to the BDCs, there will be a strong strain on the foreign reserves
- Foreign reserves are dwindling due to low income.
- BDCs get the $ at 197 and sell at N250. Excess gain.
- BDCs should hustle for $ henceforth.
- BDCs should note that BigBrother is watching the hustle process.
- CBN will prioritize $ sales for Letters of Credit, import of petroleum products and other key payments
- we can now fund our domiciliary accounts directly.

Author - the CBN Governor with 9 lives!

It is well. How we wan do summer this year sef?

The Bold is not what the CBN plans on doing, but what they've been doing following the whole FX brouhaha.


Wondering what the effects of allowing customers to now deposit foreign currencies, would be though.

Guk:
Oh really Only BDCs to blame?? No blame to CBN Gov who kept the FOREX vault open for GEJ and friends to use bulldozers and cranes to pack our $$$$.

The CBN Gov is shameless. He should have fallen on his sword since!!!

The issue is "what's the way forward"? Which is what CBN is trying to plan, by first curtailing the greedy activities of BDC. Hopefully one after the other, we'll get it right.

Putting blames won't get us anywhere at this point.

solid3:
What does this autonomous source means?

Synonym for Politicians

Onegai:


I approached the bank and they refused selling Treasury bills (that rates are bad) and tried talking me into Fixed Deposits (so I walked away). Some of my shares have been cashed out but I've been thinking Dangote Cement won't be a bad idea. I believe I already have NBC or Coca-Cola.

Can I pm you please?

Call your broker and ask them instead. Ask for Treasury bonds and not bills. Bills are short term maturity instrument. You can also ask for corporate bonds. Some bonds may have a minimum investment amount, but they should be able to tell you this.

It could be the case that the banks themseleves are engaged in some sort of arbitrage - i.e they are buying the government bonds with higher rates and selling to you at lower rates (Naija, i hail o)

You can easily check out the rates here on the Nigerian Stock exchange website.

http://www.nse.com.ng/Issuers-section/listed-securities/listed-bonds

I would caution against buying stocks just because you think it's a big company. Some of them are big company with poor corporate governance. E.g Oando.

For stocks, i like the following companies.

Nigerian Breweries
Unilever Nigeria
Guinness Nigeria
Nestle Nigeria.

These are good companies with good management and strong cashflows. But i would caution you not to take this as an investment advice. This is just my opinion, based on studying some of these companies.

Yes, it's okay to PM me, but unless you think it's something very confidential, i think many other people can benefit from these sorts of public domain exchange.

It is time we asked the CBN governor to explain things as per what his policy outcome would be and not create more confusion with his policy somersault. If demand still remains higher than supply no bank will sell at the official rate. They are not charity organisations. In fact, they have never sold in the past at official CBN rates. Why are we accepting all these crap from this man?

unite4real:
SALES TO BDCS BY GOVERNOR GODWIN I. EMEFIELE—JANUARY 2016

1. Good afternoon ladies and gentlemen and welcome to the Central Bank of Nigeria (CBN). The Management of the Bank has called this Press Conference to give you updates on recent developments in our Foreign Exchange Market as well as the decisions we have taken to ensure that we continue to strive to attain our mandates as set out in the CBN Act of 2007. In order to do so, let me first give you a brief overview of both the global and domestic contexts.

2. As we all know by now, Nigeria has been dealing with the effects of three serious and simultaneous global shocks, which began around the third quarter of 2014. These include:
· The over 70 percent drop in the price of crude oil, which contributes the largest share of our Foreign Exchange Reserves;
· Geopolitical tensions along critical trading routes in the world including between Russia and Western Powers, Saudi Arabia and Iran, etc; and
· Normalization of Monetary Policy by the United States’ Federal Reserve Bank.

3. In the aftermath of these shocks, growth in the global economy in the first two quarters of 2015 was less than envisaged thereby leading to a weak outlook for the rest of the year. Indeed, estimates of global growth for 2015 have been revised from almost 4 percent to 3.1 percent. The challenges of these global developments are having lopsided effects in many emerging and developing countries. Within this context, and especially when juxtaposed with comparable countries, the Nigerian economy remains moderately robust. Nonetheless, these strong global headwinds are impacting the domestic economy considerably. In 2015, GDP growth decelerated from 3.9 percent in the first quarter to 2.4 percent in the second quarter. However, it has increased slightly to 2.8 percent in the third quarter.

4. Although headline inflation remained single digit, it stayed slightly above the Bank’s tolerance range of 6—9 percent, having risen marginally from 9.3 percent in October to 9.4 percent in November 2015. A breakdown of the inflation dynamics indicates that the underlying pressure derives largely from the lingering base effects of unfavourable energy prices and exchange rate pass through, which may have been exacerbated by delayed harvests.

5. Following the drop in crude prices from a peak of US114 barrel in July 2014 to as low as US$33/barrel in January 2016, the country’s reserves has suffered great pressure from speculative attacks, round tripping and front loading activities by actors in the FX market. This fall in oil prices also implies that the CBN’s monthly foreign earnings has fallen from as high as US$3.2 billion to current levels of as low as US$1 billion. Yet, the demand for foreign exchange by mostly domestic importers has risen significantly. For example, the last we had oil prices at about US$50 per barrel for an extended period of time was in 2005. At that time, our average import bill was N148.3 billion per month. In stark contrast, our average import bill for the first nine months of 2015 is N917.6 billion per month, even though oil prices are now less than US$35 per barrel. The net effect of these combined forces unfortunately is the depletion of our foreign exchange reserves. As of June 2014, the stock of Foreign Exchange Reserves stood at about US$37.3 billion but has declined to around US$28.0 billion as of today.

6. To avoid further depletion in the reserves, the CBN took a number of countervailing actions including the prioritization of the most critical needs for foreign exchange. In this regard, and in order of priority, we decided to provide the available but highly limited foreign exchange to meet the following needs:
· Matured Letters of Credit from Commercial Banks
· Importation of Petroleum Products
· Importation of critical Raw Materials, Plants, and Equipment, and
· Payments for School Fees, BTA, PTA, and related expenses

7. In total disregard of the difficulties that the Bank is facing in meeting its mandate of “maintaining the country’s foreign exchange reserves to safeguard the value of the Naira”, we have continued to observe that stakeholders in some of the subsectors have not been helpful in this direction. In particular, we have noted with grave concern that Bureau de Change (BDC) operators have abandoned the original objective of their establishment, which was to serve retail end users who need US$5,000 or less. Instead, they have become wholesale dealers in foreign exchange to the tune of millions of dollars per transaction. Thereafter, they use fake documentations like passport numbers, BVNs, boarding passes, and flight tickets to render weekly returns to the CBN.

8. Despite the fact that Nigeria is the only country in the world where the Central Bank sells dollars directly to BDCs, operators in this segment have not reciprocated the Bank’s gesture to help maintain stability in the market. Whereas the Bank has continued to sell US Dollars at about N197 per dollar to these operators, they have in turned become greedy in their sales to ordinary Nigerians, with selling rates of as high as N250 per dollar. Given this rent-seeking behaviour, it is not surprising that since the CBN began to sell foreign exchange to BDCs, the number of operators have risen from a mere 74 in 2005 to 2,786 BDCs today. In addition, the CBN receives close to 150 new applications for BDC licenses every month.

9. Rather than help to achieve the laudable objectives for which they were licensed, the Bank has noted the following unintended outcomes:
· Avalanche of rent-seeking operators only interested in widening margins and profits from the foreign exchange market, regardless of prevailing official and interbank rates;
· Potential financing of unauthorized transactions with foreign exchange procured from the CBN;
· Gradual dollarization of the Nigerian economy with attendant adverse consequences on the conduct of monetary policy and subtle subversion of cashless policy initiative; and
· Prevailing ownership of several BDCs by the same promoters in order to illegally buy foreign currencies multiple times from the CBN.

10. More disturbing, though, is the financial burden being placed on the Bank and our limited foreign exchange. The CBN sells US$60,000 to each BDC per week. This amount translates to US$167 million per week, and about US$8.6 billion per year. In order to curtail this reserve depletion, we have reduced the amount of weekly sales to US$10,000 per BDC, which translates into US$28.4 million depletion of the foreign reserve per week and US$1.476 billion per annum. This is a huge hemorrhage on our scarce foreign exchange reserves, and cannot continue especially because we are also concerned that BDCs have become a conduit for illicit trade and financial flows.

11. In view of the above, the Management of the Central Bank of Nigeria has reached the following decision, which take immediate effect:

a) The Bank would henceforth discontinue its sales of foreign exchange to BDCs. Operators in this segment of the market would now need to source their foreign exchange from autonomous source. They must however note that the CBN would deploy more resources to monitoring these sources to ensure that no operator is in violation of our anti-money laundering laws;

b) The Bank would now permit commercial banks in the country begin accepting cash deposits of foreign exchange from their customers.

12. In closing, let me note very importantly that these measures are not intended to be punitive on anyone or any group. Rather it is meant to ensure that the CBN is better able to carry out its mandate in an effective and efficient manner, which guarantees preservation of our scarce commonwealth, and that our hard-earned financial system stability remain intact to the benefit of all Nigerians.


http://www.proshareng.com/news/Forex/Effective-immediately-CBVN-stops-sales-of-Fx-to-BDCs-Allows-Nigerians-lodge-Forex/29753

Welcome development however, but it is long overdue,
My opinion here is that the Parallel market and all other source of forex should be temporarily shut during this crisis
I have long been wondering what benefits the BCDs and other parallel adds to the current situation of the naira forex issue
It is clear that the Parallel market is not as regulated as the Banking Industry, policies crippling the banks making them
not accept forex deposit will only strengthen illegal transactions in Parallel market further putting a strain on the naira

Imagine if this directive from CBN had been in effect in November, this would have allowed banks to
- Mop up all the foreign currency inflow into the country during the festive period, as Nigeria ranks high in Africa among
the countries that receives large amount of forex inflow from relatives abroad
- People who have been hoarding foreign currencies would be forced to off load them in the banks
- Banks would in turn have some short term liquidity to meet its obligations
- Forex that goes to the BDCs would have been utilized for legitimate businesses that add value to the economy
All of this would overall ease the pressure on the Naira
It is a known fact that Nigeria's major source of forex is from crude oil, but lets not forget that fuel importation also consumes a
volume of our forex inflow.
To strengthen the Naira we simply need to stop importation of fuel, our refineries must work
Diversify the economy encouraging other sector to thrive contributing to economy
CBN also needs regulate how much bank sells it's forex, @ an interbank rate of about 197 naira for a rate of about 240/250 to a naira
banks charging its customers is not acceptable. CBN needs to cap the rate at which banks sell to its customers

bookface:


Call your broker and ask them instead. Ask for Treasury bonds and not bills. Bills are short term maturity instrument. You can also ask for corporate bonds. Some bonds may have a minimum investment amount, but they should be able to tell you this.

It could be the case that the banks themseleves are engaged in some sort of arbitrage - i.e they are buying the government bonds with higher rates and selling to you at lower rates (Naija, i hail o)

You can easily check out the rates here on the Nigerian Stock exchange website.

http://www.nse.com.ng/Issuers-section/listed-securities/listed-bonds

I would caution against buying stocks just because you think it's a big company. Some of them are big company with poor corporate governance. E.g Oando.

For stocks, i like the following companies.

Nigerian Breweries
Unilever Nigeria
Guinness Nigeria
Nestle Nigeria.

These are good companies with good management and strong cashflows. But i would caution you not to take this as an investment advice. This is just my opinion, based on studying some of these companies.

Yes, it's okay to PM me, but unless you think it's something very confidential, i think many other people can benefit from these sorts of public domain exchange.

I know I have Nestle and NB. And I want to pm because if I ask what I want to here, all the nl scammers will show up like hungry sharks.

realborn:


Oya na...... Ask

The bank exchange rate for dollar is 199, if i exchange $5000 at the bank i will have 900 thousand naira.
What if i have the raw cash in my hand and decide to go to the Black Market (Mallam/Ab0ki), how much will i get ??

They may buy from you at the rate of 250 or more depending on your ability to negotiate...

bookface:


Government bonds for one - If you can ask your broker about this. If you can get rates closer to 12 or 13 %, this should help you beat inflation which is currently at 9% by about 3% per annum.

Properties, is probably still a good idea, although i don't like this idea very much because they are illiquid investments and would not return as much value as the first option in this case. Nigerian properties at the moment are overvalued. The best rental yield you would probably get from your investment is about 3-5% even in prime areas like Lagos and Abuja. Which is well below inflation rate at 9% and well below government bond yields at 13%.

Finally, if you are into stocks, you could consider a buy and hold strategy - but with a very long term view. In the short term (about 2 to 3 years) stocks will probably underperform, if current economic situation worsens. However, in the longer term, you would probably make a lot of money from holding some stocks in your portfolio. You should stay away from oil and gas stocks such as the likes of Oando - stay away from banks with bad corporate governance (especially banks with large un-collateralized loans to the oil and gas industry) - you can buy company stocks like 7Up, Coca Cola, Maggi, Cement etc.

The best approach is holding each of this items in your portfolio, and having a diversified portfolio holding

In either case, there is nothing worse than simply holding cash in your bank account. You lose 9% of the value of that cash every year.

You should be careful though, there are enough scammers out there, talk to your broker if you have one, and ask about each of the items i have listed above

Boss are you a finance expert and/or an economist? You sure sound experienced.

Please what do you think of investing in stocks of any of the IOCs and/or Telecomms for the mid to long term?

Addicted2Women:


The bank exchange rate for dollar is 199, if i exchange $5000 at the bank i will have 900 thousand naira.
What if i have the raw cash in my hand and decide to go to the Black Market (Mallam/Ab0ki), how much will i get ??

. They may buy from you at the rate of 250 or more depending on your ability to negotiate... that's more than 1.2mil

Dominiquez:
I am still wondering how we allowed a man who retired 30 years ago and never ran any business but rear cow to come back and become our leader.

Welcome to the cow paradise.

Even if he (PMB) doesn't know what to do, he has technocrats around him whose jobs are to advise him adequately.

I agree with you; but how many bring in tooth pick? I did not know CBN could sell directly to them, I thought CBN said they have to buy independent persons....Ok.

Boss13:


CBN will sell dollars to genuine importers, especially if such goods are allowable into the country. We cannot fund importers to bring in tooth pick. Nigeria should not be a dumping ground

doctokwus:
This cbn governor is a dunce.
Is he not aware the bdc and abokis source their dollars mainly from banks?
The banks will simply sell their deposits and up goes the rate again.
Wonder when this Emefiele will be sacked.

I think u are very wrong.
the banks are not allowed to arbitrarily sell dollar deposits. Because If I deposit cash in dollars in a bank, I fully expect to get it back in dollars. so which deposit will the banks sell?

doctokwus:

Will BVN tell a dollar dealer from an ordinary buyer?

remember the dollar limit for all

But why are banks no longer selling PTA/BTA

YomiYarzo:



Welcome development however, but it is long overdue,
My opinion here is that the Parallel market and all other source of forex should be temporarily shut during this crisis
I have long been wondering what benefits the BCDs and other parallel adds to the current situation of the naira forex issue
It is clear that the Parallel market is not as regulated as the Banking Industry, policies crippling the banks making them
not accept forex deposit will only strengthen illegal transactions in Parallel market further putting a strain on the naira

Imagine if this directive from CBN had been in effect in November, this would have allowed banks to
- Mop up all the foreign currency inflow into the country during the festive period, as Nigeria ranks high in Africa among
the countries that receives large amount of forex inflow from relatives abroad
- People who have been hoarding foreign currencies would be forced to off load them in the banks
- Banks would in turn have some short term liquidity to meet its obligations
- Forex that goes to the BDCs would have been utilized for legitimate businesses that add value to the economy
All of this would overall ease the pressure on the Naira
It is a known fact that Nigeria's major source of forex is from crude oil, but lets not forget that fuel importation also consumes a
volume of our forex inflow.
To strengthen the Naira we simply need to stop importation of fuel, our refineries must work
Diversify the economy encouraging other sector to thrive contributing to economy
CBN also needs regulate how much bank sells it's forex, @ an interbank rate of about 197 naira for a rate of about 240/250 to a naira
banks charging its customers is not acceptable. CBN needs to cap the rate at which banks sell to its customers

You have hit the key points

Pls i need answers,, pls dont blast me i need answers,, with this event, is it advisable to buy dollar now, and wait to resell. Thanks

speak2jasmine:
Pls i need answers,, pls dont blast me i need answers,, with this event, is it advisable to buy dollar now, and wait to resell. Thanks

How long can you wait for?

Addicted2Women:


The bank exchange rate for dollar is 199, if i exchange $5000 at the bank i will have 900 thousand naira.
What if i have the raw cash in my hand and decide to go to the Black Market (Mallam/Ab0ki), how much will i get ??

Raw cash $ or N?

masonkz:



The Bold is not what the CBN plans on doing, but what they've been doing following the whole FX brouhaha.


Wondering what the effects of allowing customers to now deposit foreign currencies, would be though.

You are very right...

realborn:


Raw cash $ or N?

I have raw $ and i want to get raw naira at the black market.

Arian11:
my last hope to pay my f***king fees....why are these people like this .....would start making people travel to ghana just to change currency...mtcheww

nduu.si@gmail.com
You don't need to travel to Ghana. Inbox me I will guide you. Don't want to put it here to avoid adverts.

I will make N1 = 1 dollar (PMB)