NIGERIA’S REFUSAL TO DEVALUE NAIRA LIKELY TO FAIL, AGAIN

Four years after Nigeria tried and failed to stop its currency from collapsing, Africa’s biggest crude producer is again reacting to this oil crisis the same way it did in the recent past.

It worked out badly then as oil revenues, which account for 90% of foreign-exchange earnings, failed to rebound in time -- leading to a depletion in the central bank’s fire power to defend the naira. It will likely fail again, if the West Africa nation sticks to the same template.

A surge in supply after OPEC failure to agree on production cuts with Russia has combined with reduced demand as the coronavirus pandemic disrupts economies globally. This means crude prices will remain low far longer than the central bank’s dwindling reserves can support the currency, which has weakened the least among major oil producing countries in 2020.

The naira weakened slightly last week after crude prices crashed, but since has remained largely stable. Nigeria’s President Muhammadu Buhari considers a stable naira as a keystone in his plan to bolster and wean the economy off oil. In a rare public acknowledgment he indicated that the pandemic could trigger a foreign exchange re-alignment after he met with his new economic advisory council, according to a statement emailed on Thursday.

Buhari agreed with the council, led by orthodox economist, Doyin Salami, that “tough economic decisions” may be needed to face the crisis,the presidency said . But the central bank, which has kept the currency in a quasi-peg to the dollar since mid-2017, has said it has no plans for a devaluation and threatened to investigate any local currency dealers suggesting otherwise.
“The administration will fight tooth and nail to avoid a devaluation in the short-term,” said Malte Liewerscheidt, vice president at Teneo Intelligence in London.

The reason -- Nigeria’s import dependent economy has seen inflation accelerate to a 22-month high in February and could rise even faster if the currency weakens. Despite being oil rich, the West African nation imports almost 100% of its gasoline due to mismanagement of its domestic refineries. The fuel is then sold at subsidized prices to Nigerians. A weaker naira would raise the cost of those subsidies, which already consumes a chunk of government revenues at almost $2 billion a year.

The central bank has blamed speculators for any weakness in the currency and the Economic and Financial Crimes Commission said its agents are raiding hotels and bureau de change outlets to arrest offenders hoarding foreign currency, a tactic used after crude prices crashed in 2014.

The regulator “is poised to apply the toolbox developed during the 2014-16 oil price crisis,” said Liewerscheidt. “Providing high yields and preferential foreign-exchange access to portfolio investors while curbing demand by other market players through measures such as import bans and rationing.”
The local currency traded at 368 per dollar as at 4.30 p.m local time on Wednesday, about 1.9% weaker since the oil price crash. Prices for 12-month forward contracts have risen to 479 per dollar, suggesting investors see the naira falling 25% in that period.

The majority of investors and analysts surveyed by Bloomberg believe the naira will eventually be devalued by as much as 15% in the third quarter.
Reverting to past measures, Central bank Governor Godwin Emefiele plans to tighten capital controls by banning forex for hand sanitizers needed to curb the spread of the coronavirus, adding it to dozens of items already barred from accessing foreign exchange.

“Active management of foreign-exchange allocation could create scarcity and delays in allocation which will inevitably push importers to seek dollars at the unofficial segment,” Lagos-based Nova Merchant Bank said in a note to clients on Tuesday.

However, foreign-currency reserves have decreased by 20% in the past two years to the lowest since November 2017, giving little room for the nation to support the naira.

Goldman Sachs Group Inc. said last week it would take an exchange rate of 600 naira per dollar for Nigeria to generate a healthy current-account surplus at today’s oil prices.

A sustained period of low crude prices will weaken dollar liquidity and elevate banks asset risks, Moody’s Investors Service said.
Average yields on naira government bonds have surged 709 basis points to 12.6% since January, according to data compiled by Bloomberg, signaling outflows resulting from falling risk appetite of investors.

The bearish sentiment is expected to continue as coronavirus fears persist, Johannesburg-based Rand Merchant Bank said in a note on Wednesday.

“The market still grapples with limited dollar supply ---as the oil price remains at abysmally low levels,” according to RMB.

SOURCE:
https://www.bloomberg.com/amp/news/articles/2020-03-19/nigeria-s-refusal-to-devalue-naira-seen-likely-to-fail-again?fbclid=IwAR3U_ZJUS8FFXp_wkDq0D8

My brother I'm just Speechless

Normal normal

Yes Bloomberg

Try to cause changes in developing nations that favors you


Na so they try to do with China

China ignored them back to back


Today look at china

They may be Currency manipulators but they are the 2nd biggest economy in the world


Economic analyst are no different from those lotto players all na guess work

iamJ:
Yes Bloomberg

Try to cause changes in developing nations that favors you


Na so they try to do with China

China ignored them back to back


Today look at china

They may be Currency manipulators but they are the 2 biggest economy in the world


Economic analyst are no different from those lotto players all na guess work

Can Nigerians compare themselves with Chinese?

Chinese love themselves. Do Nigerians?

Chinese deal harshly with corruption. Do Nigerians?

Chinese used Science & Technology to develop fast fast. Can Nigerians who depend on juju, on miracle, on say it and claim it, on visions, on "man of god"?

My brother Nigerians are NOTHING at all like Chinese. It's to me a great pity.

meavox:


Can Nigerians compare themselves with Chinese?

Chinese love themselves. Do Nigerians?

Chinese deal harshly with corruption. Do Nigerians?

Chinese used Science & Technology to develop fast fast. Can Nigerians who depend on juju, on miracle, on say it and claim it, on visions, on "man of god"?

My brother Nigerians are NOTHING at all like Chinese. It's to me a great pity.

china has population and they used it to their advantage, provided cheap labor for the world, when you come to make your product with their cheap labor, they will copy ur products and make cheap versions that's china

So I no understand wetin concern Nigeria with china progress, that method can only be done once

All those plenty jobs took many Chinese out of poverty and made many rich

Also na communist state so if you do company government will assist you to blow, America do it to they call it bailout

Nigeria no follow for anything na church we know

Bloomberg, IMF, CIA and their other naysayers are the economic weapons that often target the weak and emerging markets.

Even though it is common knowledge that it cost the CBN an arm and a leg to sustain the battle, the CBN's effort at stabilizing the Naira did not fail. If anything, it salvaged what would have been a puppeteering currency.

With the CBN's very daring effort at cushioning the Naira, the Naira has remained fairly stable over the last 4 years oscillating around the region of N350 to the $. While some have argued that the Naira should weigh far less than that, the recent percentage inflation of the Naira vis-à-vis the real inflation is at sync.

The Naira's bilateral outing with the Yen is a very realistic and futuristic venture even though they both might have yet to make the most of the relationship.

Let no one fool you, we are passed the era of seeking approvals from (licking asssses) their Bloomberg and IMF.

We are looking inwards and, East.

meavox:

Despite being oil rich, the West African nation imports almost 100% of its gasoline due to mismanagement of its domestic refineries. The fuel is then sold at subsidized prices to Nigerians.

^^^^
We've been told the refineries can't be fixed because there's no money. But somehow there's always enough money, year after year - to sustain a multi-million dollar fuel importation racket.

We've been told that the federal government cannot successfully manage state owned oil enterprises because "government has no business in business". Fair point. But again somehow, the Norwegians, the Saudis, the Russians etc. have been able to successfully run their own state owned oil enterprises and turn a healthy profit, year after year. Do the Norwegians have two heads each? I am asking for a friend.

Truth dressed in rags and nobody recognized her.

It is certainly not looking good but we did neglect diversification of our economy inspite warnings over years. We had wrong priorities.We played BAD politics, fought avoidable civil war and destroyed spirit of true federalism.We spent HEAVILY fightIng APARHEID in South Africa than developing our economy. Badly conceived programmes like OFN, Green Revolution, DFFRI, NDE, etc. were created, billions budgeted but got siphoned away. Leaders' appetite for stealing public money ballooned.

Government after government paid lip service to diversification inspite of hiring ELITE economists to manage our economy: Onalapo Soleye, P. Chu Okongwu, Kalu Idika Kalu, Anthony Ani, Abubakar A. Abubakar, Ngozi Okonjo-Iweala, etc. We crafted periodic National Development Plans but neglected it. At a point, we abandoned the concept altogether and operated on knee-jerk basis. All geopolitical zones neglected good old AGRICULTURE and ran after OIL revenue allocations.

The populace preferred political leaders who would talk smoothly, make money 'flow' and allowed us import everything. We loathe the leaders that would make HARD DECISIONS. We became too comfortable and laidback to interrogate our leaders. We goofed. We could have done better but we didn't. We brought this BURDEN upon ourselves.

Difficult days are ahead but Nigeria will emerge STRONGER because what is written has been written.

Why are these foreign news organizations always interested about Nigeria devaluing its currency and running articles upon articles on it? It's like they're obsessed with it or something.

Buharinomic voodoo economics.

600 �

festacman:
It is certainly not looking good but we did neglect diversification of our economy inspite warnings over years. We had wrong priorities.We played BAD politics, fought avoidable civil war and destroyed spirit of true federalism.We spent HEAVILY fightIng APARHEID in South Africa than developing our economy. Badly conceived programmes like OFN, Green Revolution, DFFRI, NDE, etc. were created, billions budgeted but got siphoned away. Leaders' appetite for stealing public money ballooned.

Government after government paid lip service to diversification inspite of hiring ELITE economists to manage our economy: Onalapo Soleye, P. Chu Okongwu, Kalu Idika Kalu, Anthony Ani, Abubakar A. Abubakar, Ngozi Okonjo-Iweala, etc. We crafted periodic National Development Plans but neglected it. At a point, we abandoned the concept altogether and operated on knee-jerk basis. All geopolitical zones neglected good old AGRICULTURE and ran after OIL revenue allocations.

The populace preferred political leaders who would talk smoothly, make money 'flow' and allowed us import everything. We loathe the leaders that would make HARD DECISIONS. We became too comfortable and laidback to interrogate our leaders. We goofed. We could have done better but we didn't. We brought this BURDEN upon ourselves.

Difficult days are ahead but Nigeria will emerge STRONGER because what is written has been written.

^^^
No Sir.

You have not hidden your support for key players in this administration and the ruling party that produced it. After 5 years, there is very little to be said in their favour. What major policy achievement can we speak of? Is it the multiple exchange rates that encourage round tripping? What?

I asked a couple of questions in my previous post. Can you answer them?

VolvoS60:


^^^
No Sir.

You have not hidden your support for key players in this administration and the ruling party that produced it. After 5 years, there is very little to be said in their favour. What major policy achievement can we speak of? Is it the multiple exchange rates that encourage round tripping? What?

I asked a couple of questions in my previous post. Can you answer them?

If you can't tell or deliberately refuse to recognize where the rain started beating you, how do you rationally tell if the efforts to contain the rain and attendant flooding are yielding result.

Something that's been codedly devalued or is there another version of devaluation they are talking about again ni.

Please economist should step in ooo



Modified: Since we are an import country and not manufacturing, please how will the devaluation of the naira help balance the Nigerian economy. Now we spend more to get the same value?

Naija mata don dey taya non nigerians sef join.......mumu leaders wey nor sabi anything

Mtcheeww

The matter just tire me....I don't know wether we dey move forward or backwards in dx country

What is strong with all these evil international community?


Can't they mind their business?



Why must we devalue our Naira?


How much is yen?

RenaissanceGuy:
Why are these foreign news organizations always interested about Nigeria devaluing its currency and running articles upon articles on it? It's like they're obsessed with it or something.

Jonathan:
What is strong with all these evil international community?


Can't they mind their business?



Why must we devalue our Naira?


How much is yen?

The answer is not far fetched.

They simply know more than a clueless and incompetent dullard disguising as a president

I hope this government knows what they are doing because this will lead to defending the Naira with the foreign reserves which might not matters if we are self dependent on the local market. This is the time to diversify, fix the power sector and revamp our factories for large scale production of products to stop dependent on foreign products.

Despite being oil rich, the West African nation imports almost 100% of its gasoline due to mismanagement of its domestic refineries


Nothing, I mean nothing, breaks my heart about Nigeria like reading those lines.

Who cursed this country?

festacman:
It is certainly not looking good but we did neglect diversification of our economy inspite warnings over years. We had wrong priorities.We played BAD politics, fought avoidable civil war and destroyed spirit of true federalism.We spent HEAVILY fightIng APARHEID in South Africa than developing our economy. Badly conceived programmes like OFN, Green Revolution, DFFRI, NDE, etc. were created, billions budgeted but got siphoned away. Leaders' appetite for stealing public money ballooned.

Government after government paid lip service to diversification inspite of hiring ELITE economists to manage our economy: Onalapo Soleye, P. Chu Okongwu, Kalu Idika Kalu, Anthony Ani, Abubakar A. Abubakar, Ngozi Okonjo-Iweala, etc. We crafted periodic National Development Plans but neglected it. At a point, we abandoned the concept altogether and operated on knee-jerk basis. All geopolitical zones neglected good old AGRICULTURE and ran after OIL revenue allocations.

The populace preferred political leaders who would talk smoothly, make money 'flow' and allowed us import everything. We loathe the leaders that would make HARD DECISIONS. We became too comfortable and laidback to interrogate our leaders. We goofed. We could have done better but we didn't. We brought this BURDEN upon ourselves.

Difficult days are ahead but Nigeria will emerge STRONGER because what is written has been written.

Stop beating about the bush.


Just say Buhari is a dunderhead, nobody go beat you

Awon pokenoser

iamJ:
china has population and they used it to their advantage, provided cheap labor for the world, when you come to make your product with their cheap labor, they will copy ur products and make cheap versions that's china

It take more than labor
They have higher IQ

Useless country

Ok

buharinomics.

Buhari thinks force and stubbornness is the solution to everything. Let's see where that approach will get Nigeria to

Buhari incompetence brought corona virus....

It will consume him and all those who queued Up under hot sun to vote this calamity..

Useless things

They always sound like prophets of doom but seriously Nigeria is in for another round of recession. Even the fg is preaching and claiming to embark on diversification of the economy all na lie, if you can guarantee 18 hrs of electricity per day then forget it.