What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? - Business (4) - Nairaland
Nairaland Forum / Nairaland / General / Business / What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? (41780 Views)
Aishah Ahmad: Profile Of The CBN Deputy Governor / Explaining The New Bank Charges, Lending And Deposit Rates Announced By The CBN / Skye Bank Management Takedown By The CBN: The Inside Story - Naijapromoter.com (2) (3) (4)
(1) (2) (3) (4) (5) (6) (7) (Reply) (Go Down)
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by nkwachiabel(m): 8:33pm On Feb 19, 2016 |
from my own point of view, I think the proper thing is not just sharing the money in dollars but buying more dollars. the more d dollars being bought, the less the value in relation to the naira... thereby appreciating the value of the naira. |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by MENTORCH(m): 8:34pm On Feb 19, 2016 |
The cbn too has no much dollar, Coz the country isn't making much from oil anymore.Do you want them to steal dollar? 1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by chinchum(m): 8:34pm On Feb 19, 2016 |
Obiagelli:CBN does not print dollars, it only earn it from exporters, remittances and FDIs. so our foreign reserves is a sum total of this inflow minus outflow from importers, students who pay in foreign currency, medical tourists and all sorts of folks who need foreign currency payment. our reserves is currently at 26 billion USD, so if CBN floods the economy with dollars, it will stabilise things a little bit, but it is bringing the evil day closer, we could run out of foreign reserves soon enough. remember the 26 billion usd foreign reserves is the lowest we've had in 12 years. Nigeria lost 1.13 billion USD last month from the foreign reserves. Venezuela ran out of foreign reserves, and turned to gold as a commodity, it is the worst hit of all the oil producing countries, the economy is in tatters at the moment, and the difference between the official rate of the dollar to bolivars at official rate and parallel rate is like 400%. Nigeria's difference in naira to dollar at official rate and parallel rate is hovering at 90%. we are in dire straits at the moment in Nigeria, our savers are sharp reduction in demand for dollars by importers,, take note that the Nigerian govt is part of the importers, as roughly 35% of forex demand is that to import refined oil, so if the refineries can work, and other private refineries to meet local demand of refined oil, we have solve 35% of the problem, then our big boys and ladies overseas need to bring in more remittances from obodo oyinbo to shore up our reserves. we need to expand our export base, especially refined goods that value has been added, bulk of our current day exports are simply raw materials/commodities. Finally, we as Nigerians must patronise more made in naija products/services, our import base grew because the middle class has grown over the years, the typical middle class has a special appetite for imported products or foreign services. I am using a phone, pardon my arrangement, but this two cents is that of an engineer, but economists should have no reason to dispute it. 14 Likes 1 Share |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by grandstar(m): 8:34pm On Feb 19, 2016 |
Obiagelli: Do you know the naira has crashed at the black market? Prices of goods are already rising. 1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by 989900: 8:35pm On Feb 19, 2016 |
Obiagelli: We don't have enough (not earning enough) like we did when oil was $100/barrel, but we'r still changing the little we've got to Naira and paying to the tiers of government in monthly alocations, which they in turn, turn to the markets for dollars when they do need it both for legit purposes and illegit purposes -- causing too much Naira chasing a few dollars in the market as a whole (official and BM) -- which could have been avoided. The uncontrolled or unregulated demand for dollars by gov't arms which contributes to scarcity of dollars, thereby, driving prices high, would have been better controlled by the said dollar certs or vouchers. It helps the CBN's reserves too sorta. In some other sense (though minute), you could liken it to every salary account holder with commercial banks, withdrawing all their salary at once -- but we have cheque books, and withdraw in batches. BTW, we earn little forex still from other non-oil sources. Have you ever wondered why @ $120-$147/barrel the exchange rate didn't appreciate proportionally? 2 Likes 1 Share |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Reptyle(m): 8:37pm On Feb 19, 2016 |
Huh!!! I'm I on Nairaland.com  3 pages of discussions on Nigeria ' s economy and no insults and brickbats? Impressive....this is how it should be. 13 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Nobody: 8:39pm On Feb 19, 2016 |
Jonwesley:I swear i don confuse since yesterday reading the topic |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by babadee1(m): 8:41pm On Feb 19, 2016 |
989900: Dollar certificates have to be backed by and redeemable with actual currency otherwise they have no value. 1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Nobody: 8:42pm On Feb 19, 2016 |
grandstar:This is really interesting. |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by modath(f): 8:45pm On Feb 19, 2016 |
Obiagelli, let me paint this simple scenario, you are 60kg & you get a piece of material that is just enough to make you an attire.. Somehow, your tailor took ill for a couple of months & in that time, you too had gained another 60kg, your tailor then accidentally burns a couple of inches when he got well.... he then asks you to add more of same exact material to make up for both your weight gain & also the burnt part so he could get on with your job..... The question is ; where are you supposed to get more when you are not the garment factory. That is Nigeria's problem, we are import dependent with a large & growing population, we also have the misfortune of being a mono commodity export economy!!! DOUBLE JEOPARDY.  CBN can't flood the market with USD cos they don't even make enough of it... 4 Likes 1 Share |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by amanze15(m): 8:46pm On Feb 19, 2016 |
wordbank:mention three countries in the world wey capitalism Don help, don't answer that  , nigerian government have been selling it's properties since 1999, just a few have been able to be productive. Diversification have been answered?! NO because the average farmer can afford to more his crops from the hinterlands of bauchi to port Harcourt freely, thsee are issues,1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by 989900: 8:47pm On Feb 19, 2016 |
babadee1: Read further on how it works. It will help. I posted some links earlier, and some topics too. |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Chuksemi(m): 8:47pm On Feb 19, 2016 |
Make I put eye for this matter.í ½í¸ |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by lastpage: 8:50pm On Feb 19, 2016 |
Obiagelli: First, we earn a lot of our Revenue (Federal Govt revenue) in Naira (internally generated revenue, as per Taxes, VRT, Stamp duties, Levies, e.t.c. So, the basis of your assumption is wrong. Secondly, just like CBN Directors have become executive owners of BDC (thereby creaming-off a large gain for themselves while defrauding the Govt they are serving), the State Governors will simply and suddenly become owners of Burea De Change (BDC), they will collect the Dollars from the Fed Govt, pass it on to their own BDC (at official rate of #197 which is what they would declare to their state coffers), which then goes on to sell it at #350 in the black market, thereby making a killing for themselves! Once again, the masses lose while the Executive Governor becomes a Billionaire overnight! Again, the idea of "surplus dollars" is similar to "living in a fools paradise"!. How can you have "Surplus Dollars", .......when the price of the major earner of such 'Surplus Dollars', ...Crude oil, has dwindled by as much as 80%? Where is the "surplus Dollars" going to come from? Finally, let me inform you that our Foreign Reserve, like that of other countries, is denominated in Dollars. In 'street language', it is the amount of Dollars we are able to keep, put aside, put in Nigeria's Savings Account. It is sought from our "Dollar Income". So if we share the "Surplus Dollars", it simply means we wont be able to save the same Dollars hence our Foreign Reserve will deplete. The implication of this is that our "Naira" will become even more worthless than Zimbabwean currency........ remember President Mugabe also "shared the Surplus Dollars" while he could not earn much in return!  Like you said, Dollars became Surplus during the election time as the former President Well, the implication, fall out and implication is what we are still experiencing till today, months after he has left office. The Naira has become almost worthless, because it has no Dollar (Foreign Reserve) to back it up. It is the amount of Dollars you have "In Reserve" that determines how much your strong your currency/Naira becomes. Call it "surplus" and share it, then you have a worthless local currency. End of story The only alternative, to have "surplus Dollars to share", is to manufacture a lot of things and export it all over the world, like Germany. If that can be achieved, the Naira itself will gain strength, and we wont even need to share Dollars in the first place, because our Naira will be more than good enough Lastpage! 8 Likes 1 Share |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by cckris: 8:54pm On Feb 19, 2016 |
Obiageli Aku is side-stepping the FACT that the United States was formed in 1776, based on the nearly perfect THEORY OF THE STATE, by Jean Jacques Rousseau in 1762, for individuals to form an organised people, or STATE. NATIONAL CONFERENCE is the most appropriate forum for the disparate ethnicities that pretend to be Nigerians, to AGREE TO FORM A STATE, based mutually beneficial Terms & Conditions. This is the political FOUNDATION upon which a SUSTAINABLE ECONOMIC FOUNDATION can be built. Without this, CAPITAL FLIGHT will continue to siphon whatever billions of dollars accrues in FREE OIL MONEY. Prof Wole Soyinka is again advising Buhari to convene an Economic Conference. Military 419 Constitution is the reason things that work in other places fail here. Even if Buhari borrows $100 billion, they will just evaporate in Capital Flight into well-organised countries, where rights & properties are protected by a Strong Judiciary. |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Nobody: 8:54pm On Feb 19, 2016 |
modath:This. I fear for the future. And the sorry state of our education system means we are grooming more olodos than ITK's. We train engineers to become pastors or cashiers. 1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Nobody: 8:55pm On Feb 19, 2016 |
Alright, this is the implication-if for example, the proceeds from export of crude, which is in dollar, is used in paying for States allocation and the rest, this will be at a greater cost and it might lead to more scarcity of the dollar. Our present condition means that we have to export more of crude oil to get the proceeds we used to get, this means the cost will increase,and this means Nigeria has an unfavourable balance of trade already, so if govt go ahead to pay in dollars, this will create an habit of further pursuit and hoarding of dollar, in fact, some will stock it in the house, hoping that the dollar will appreciate In value and further sell and make profits.... Those conversant with ostentatious goods can testify..... Then the circle begins again. It's useless and will further crumble the economy. And remember dollar is just one of the currencies, there is still pounds, yen and others. This behaviour is meant to create an image of falsity, a force impression that the economy is buoyant, a sort of masquerading that can't last. 1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by ColtPython(m): 8:57pm On Feb 19, 2016 |
I'm afraid to sleep. Might wake up tomorrow and hear that the naira has broken another low record  1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by InvertedHammer: 9:01pm On Feb 19, 2016 |
Obiagelli:/ The FG cannot flood the market with dollars just as it didn't refurbish the refineries. Remember the Igbo saying, " ana adighi mma bu uru ndi nze". We had oil cabal. There are forex cabals. Last few months arbitrage has created many overnight billionaires. Buy $1m at N197 and sell at N400. That is N203m in a matter of days. Multiple by n times in a month. Oil didn't give this much profit. This is the most viable get-rich quick scheme in this century. Before...$5000 gives N750k. Today $5000 gives cool N2million. Just $2500 makes you a millionaire in the "best place in the world" (wink).  Even those cab drivers, security guards, cleaners, etc all of you love to hate can buy your whole village now if they apply themselves. There is more to being the best place in the world than the pursuit of pleasure and worldly entertainment. The economy should be an integral part of it. / / 5 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Nicepoker(m): 9:02pm On Feb 19, 2016 |
Obiagelli:how much is crude now per barrel? |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by 989900: 9:03pm On Feb 19, 2016 |
Too many comments based on ignorance; read y'all -- it helps. 1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by babadee1(m): 9:06pm On Feb 19, 2016 |
989900: Will do. Thanks. |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Nobody: 9:06pm On Feb 19, 2016 |
Federal government are the ones making this economy bad. They said dollar is scarce in the international trade and yet they don't allow raw dollar into the economy such as western union and moneygram transactions. Now ask yourself this question. Do we really have a functioning government? I believe government should reverse that decision and you will see how little that decision can change things. 80% of dollar coming into this country is through western union and moneygram. What is this government really doing? If there is excess dollars in Banks our Naira value to a dollar will increase. Another method to increase the state of our currency purchasing power is through increase in productivity in Nigeria but the thing is, ordinary toothpicks and toothbrush we import. In this world today you have to be productive as a nation else you are doom no matter the amount of Natural resources a country has. Nigeria wahala too plenty sef. I tire 1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Kingspin(m): 9:10pm On Feb 19, 2016 |
LRNZH:Blaming Jonathan, from Dick to tom. If the change is not genuine why not endure the mess. People have destroyed this country including your most liked politicians, elderz and govs. In this 2016, we need to use our 5senses complete. Buhari, alone cannot change the country, this is his back to back rule, he need Nigerians too. 1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Nobody: 9:10pm On Feb 19, 2016 |
my dear op, there is no dollar to flood the economy with. our friend goodluck Jonathan, gcfr.IB, shared most of it with his cronies during the last election. fg can't afford to deplete the reserves which is abominably low.. Nigerians must look inward to manufacturing and exportation instead of importing toothpick, rice and pencils. 2 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Nobody: 9:11pm On Feb 19, 2016 |
chinchum:You made a lot of sense, thanks |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Sant1m: 9:13pm On Feb 19, 2016 |
989900:i am impressed, what an interesting proposition, but then if states allocation are released to them in dollars remember not all monies that accrue to federation accounts is in dollars, custom duties and various taxes. It means that we still need to create income stream as a nation to earn enough dollars. Okay, lets say Benue state receives 300m dollars as her monthly allocation. 1. Since the state cannot just go cashing dollars to pay salaries, the banks still has lots of influence on the rate the dollars will be converted to raise 3b naira for them to pay salaries. Likewise payment to contractors, since they cannot be paid in dollars. At the end the banks still keep the dollars for sale to importers at a rate that will be determined by forces of demand and supply. Nay, Nay, Nay. I don't think it will fly. Is there any advantage in this model for the local manufacturers who want to buy machinery for his factory?. 1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by phlamy(m): 9:15pm On Feb 19, 2016 |
Stelvin101: Western union and money gram are still been collected in Nigeria just that it has to be in naira and not dollars which is the perfect thing to do otherwise where will the dollar come from- heaven? NO The dollars will still come from the small we have |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by 41lady(m): 9:15pm On Feb 19, 2016 |
Based on my little knowledge of trilema triangle in economics, country can only achieve two out of the three impossible options within the triangle- fixed exchange rate, capital mobility and independent Monetary policy. In the case of Nigeria, floating exchange rate (dollar) rather than fixed and allow market forces of DD & SS to determine the value of goods and service (i.e. allow capitalism) but when the government decide to devalue naira without goods and services to export whereby the crude oil,the country dependents on have depreciate in value, the masses will suffer. China RMB has been devalued because the country fixed their manufacturing sectors, which makes their local firms to operate at lower cost and makes their products cheaper at the international market. Thus; since Nigeria don't have technology to go into electonics and I.T product manufacturing, a good step in a good direction is to put in place all the Agricultural sectors-the irrigation,extensive farming in functionality, fixed electricity, revive the manufacturing sectors that are not functioning then Nigeria can now devalue naira to encourage export. When a country devalue its currency without corresponding available products to export, it will lead to recession, because the rate of inflation will increase along side with high unemployment rate. In the case of hoarding dollar to make naira appreciate, that may not work without sufficient supply of local food stuff which is the basic needs. And how can that be achieve, by making the processing equipments close to the farm, whereby the farmer don't need to travel thousand of kilometres with the produces for processing, like rice, palm oil, groundnut, cassava, soya bean, Benny seed, ginger, chile, beans, rubber, cocoa e.t.c that will create avenue for preservation which will last untill next season or before it is transported to the market without getting spoilt and the farmers will get their revenue and be encouraged. I was surprised to hear that Malaysia got her palm oil seed from Nigeria but now Malaysia is the highest exporter of palm oil while you may ask, because the government and private investors have made the processing equipment closed to the plantation farm. As it is harvested, immediately processed and package for export and or distribution. They also have machine that can remove chicken feathers. These our leaders knows all the stuff that can fix this country but they are selfish. Only send their children abroad to study and come and continue to rule the country from where they stop. 2 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by jaymichael(m): 9:17pm On Feb 19, 2016 |
Obiagelli:Sadly so if any of these 3 scenarios don't happen. 1. OIL PRICE IMPROVING SOON. 2. EXPORT PROMOTION DRIVE- look at alternative means to raise FOREX through export of non oil commodities. 3. IMPORT SUBSTITUTION DRIVE- Find local alternative to those items we import with scarce FOREX. Let us produce what we consume and consume what we produce. When this happens, our currency will be insulated from risks arising from mono export economy we practice now. There will be no need to source for scarce FOREX to purchase basic goods save for essential raw materials and machineries we don't produce here. 1 Like 1 Share |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Nobody: 9:22pm On Feb 19, 2016 |
phlamy: Bro western union, moneygram, RIA money and the rest are international organization and they do make dollars available in every of their unit. Greed and trying to rob citizens of their money are the main reason banks Connive with CBN to use their nonsense exchange rate. In fact banks are one of the major problem Nigeria as a nation have today. All looted funds didn't just fly to overseas. Just last week a direct wiring into my account from London at the rate of 205 a dollar but here banks will pay you 195 or 194 a dollar. 2 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by CyberWolf: 9:26pm On Feb 19, 2016 |
2rutalk1:Thank you... How can we encourage export promotion (economic diversification) if we keep practicing this unitary system if government where FG controls all natural resources? 1 Like |
(1) (2) (3) (4) (5) (6) (7) (Reply)
Kennedy Okonkwo Celebrates 12th Wedding Anniversary - Pictures / Dangote Opens One-stop Shop In Onitsha / Oyinlola Market In FESTAC Demolished Without Warning, Shops Looted
(Go Up)
| Sections: politics (1) business autos (1) jobs (1) career education (1) romance computers phones travel sports fashion health religion celebs tv-movies music-radio literature webmasters programming techmarket Links: (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Nairaland - Copyright © 2005 - 2024 Oluwaseun Osewa. All rights reserved. See How To Advertise. 107 |