[quote author=Niggsrdumb post=87652018][/quote]
Very sure!
Nigeria's enemies are within. Those who feel they have to slow certain parts of the country in a bid for other parts of the country to catch up.

PHijo:

Very sure!
Nigeria's enemies are within. Those who feel they have to slow certain parts of the country in a bid for other parts of the country to catch up.

True but 4 billion out of the total human population make less than 1.5 k dollars per annum.


Why is this so?

ShenTeh:
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.

Oga, 1+1 =2 whether it comes from the IMF or from a local mathematician. You condemning Bloomberg is akin to condemning a mathematician for saying 1+1=2.

I want to ask you a question? If you take N1,000,000 to the market to buy $1,000,000, what will the rate be? probably N1 for $1

What if you bring the same 1m next week and they say it is only $500,000 they have, will they sell it to you at the same rate of N1 to $1?

Oil price has collapsed from $55 to $25 per barrel and that automatically means our dollar inflows will drop by half. How will the exchange rate remain the same? You don't need an aboki to tell you the obvious.

Please note that forex is always entering and leaving the foreign reserves. It only grows when more money comes in than goes out. The foreign reserves is now the lowest since 2017. That means more money is going out than coming in. If for instance, the government is supplying $7b to the market yearly when only $5b is coming in, the reserves will reduce.

The government is pricing the Naira has though the oil price is still $55. It is delusional and counterproductive. It will either drain the foreign reserves or cause a severe recession.

You don't need Bloomberg or the IMF to tell you this. A forex trader dealing in fundamental analysis can tell you the same. My brother who trades forex turned 500pounds to 4,000 pounds in 8 months. It is fundamental analysis.

Read how a forex trader made $1b profit by betting against the pound and forcing it to devalue https://www.thebalance.com/black-wednesday-george-soros-bet-against-britain-1978944

Do you think it is only poor countries that their currencies lose value? Study the exchange rate of the pound over the last 3 months https://www.thebalance.com/black-wednesday-george-soros-bet-against-britain-1978944

VolvoS60:


^^^^
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.

All that you said here is a contradiction

You want the government to fix the refineries?? Are you on drugs? That has been done by this government. Kachikwu said its cheaper to import fuel than to use those refineries that they are not old and uncompetitive.

Best is to privatise them. By you suggesting government repair them, it shows you will repeat the very mistakes that plunged the oil industry into its present doom. The solution is to privatize the refineries, end fuel subsidies and deregulate fuel prices.

Why are you looking at Statoil or ARAMCO? Why are you looking at Norwegian solution to a Nigerian problem? Are Nigerians naturally law-abiding citizens? Are Nigerian civil servants known for their extraordinary capability to run state-owned companies or to ruin them? The solution here is simple again: Privatise, end fuel subsidies and deregulate the price of fuel. Dangote's refinery is bigger than all government's 4 refineries put together. The private sector should take over.

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 2nd biggest economy in the world


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

What advise did they give China and the Chinese refused. I'd like to see references

gabicon:
They are not saying anything we didn't already know, if the crude oil market sneezes Nigeria catches cold. All governments from 1999 have been paying lips service to diversification of our economy. I see no reason why Nigeria can't be the major exporter of beans, groundnut, cocoa, palm oil, and cassava to the world, an investment of $2 billion in mechanisation, $1 billion in irrigation and drip tech, and $2 billion in crop modification and fertilizer. After an initial $5 billion investment the private sector investment will cause a multiplier effect. Forex will just be coming on a persecond billing.

The result will be a disaster. Anyone who tells you otherwise is ignorant

grandstar:


Oga, 1+1 =2 whether it comes from the IMF or from a local mathematician. You condemning Bloomberg is akin to condemning a mathematician for saying 1+1=2.

I want to ask you a question? If you take N1,000,000 to the market to buy $1,000,000, what will the rate be? probably N1 for $1

What if you bring the same 1m next week and they say it is only $500,000 they have, will they sell it to you at the same rate of N1 to $1?

Oil price has collapsed from $55 to $25 per barrel and that automatically means our dollar inflows will drop by half. How will the exchange rate remain the same? You don't need an aboki to tell you the obvious.

Please note that forex is always entering and leaving the foreign reserves. It only grows when more money comes in than goes out. The foreign reserves is now the lowest since 2017. That means more money is going out than coming in. If for instance, the government is supplying $7b to the market yearly when only $5b is coming in, the reserves will reduce.

The government is pricing the Naira has though the oil price is still $55. It is delusional and counterproductive. It will either drain the foreign reserves or cause a severe recession.

You don't need Bloomberg or the IMF to tell you this. A forex trader dealing in fundamental analysis can tell you the same. My brother who trades forex turned 500pounds to 4,000 pounds in 8 months. It is fundamental analysis.

Read how a forex trader made $1b profit by betting against the pound and forcing it to devalue https://www.thebalance.com/black-wednesday-george-soros-bet-against-britain-1978944

Do you think it is only poor countries that their currencies lose value? Study the exchange rate of the pound over the last 3 months https://www.thebalance.com/black-wednesday-george-soros-bet-against-britain-1978944

Voodoo economics if I may say. The fact that oil is @ $25 a barrel does not implies automatic devaluation of the Naira. Our demand for forex is also reduce. What are our major imports?... Refined petroluem products account for about 29.7% or $10.8bn in 2018. Are you guys suggesting this will remain static after the oil crash? ...No It will also crash! So we don't need $10bn to import petrol, diesel etc, may be about $6bn or less. And Dangote refinery is about taking off to completely remove that import component. Similarly, all other import sectors will slow down naturally or by fiscal policies on close scrutiny. Why then do we need to accept devaluation which will do a permanent damage to our economy? By creating panic and speculation, it give rooms for unwarranted devaluation of the Naira. The explanation of N 1,000,000 against $500,000 does not flow with me, because $$ is not a commodity it is currency. Even with commodities, if you get to a car showroom and want to buy 20 units of a particular brand and they have only 5 available, would they just hike their price because they don't have enough quantity? What these prophets of doom like Blomberg are asuggesting, cannot be accepted in any Western nations - UK, USA, France etc. In fact they will slam those currency speculators, sellers and buyers with charges of economic sabotage.
From the picture you are painting, countries like Nigeria will never have stable currency nor develop it's production base, because there a thousand and one tools available to the US for example, to set the economy tumbling -like sanctions, tariff etc
So our home grown solution will see us scale this once again. Don't fuel more speculation by lending support to Blomberg analysis.

So Buhari has been Nigeria's president since 1960, right?


He made a good analysis of the problems of Nigeria as a nation n country.
Stay there n be fighting over Buhari n Jonathan...
Onye atulu ilu ma kowalu ya ego eji nu nne ya na n'ihi

Why #5 no dey on the naira notes picture?

Anneka101:




Thank you so much, you made some point up there and I'm really impressed.

The nigerian govt closed border yday. Announced same day they are devaluing the naira. 30 days ago, there was exchange of dollar at a reduced exchange rate.
Now with the devaluation, they will make twice the amount.
That’s round tripping.

I don't understand what you mean by round tripping in this case. There was round tripping, when the central bank was maintaining two exchange rates.

The lower rate was meant for some selected sectors that imported essential commodities. Some dubious people were abusing it by buying at the lower rate of #306 and selling at the higher rate #365.

In my opinion the government is not making twice, but they are effectively paying less salary to their workers since Nairas value has reduced with respect to dollars.

gabicon:
They are not saying anything we didn't already know, if the crude oil market sneezes Nigeria catches cold. All governments from 1999 have been paying lips service to diversification of our economy. I see no reason why Nigeria can't be the major exporter of beans, groundnut, cocoa, palm oil, and cassava to the world, an investment of $2 billion in mechanisation, $1 billion in irrigation and drip tech, and $2 billion in crop modification and fertilizer. After an initial $5 billion investment the private sector investment will cause a multiplier effect. Forex will just be coming on a persecond billing.

You made good points bro, but steady, cheap electricity and security would create a bigger impact.

Nigeria already has a huge and cheap human capital, people want to work. If we had steady and cheap electricity many investors will build their processing plants in Nigeria. We already have cheap labour.

grandstar:

Are you on drugs?

^^^
This is a serious discussion. Let's keep it that way - there's no room for this.

grandstar:

All that you said here is a contradiction

You want the government to fix the refineries?? That has been done by this government. Kachikwu said its cheaper to import fuel than to use those refineries that they are not old and uncompetitive.

Best is to privatise them.

^^^
"Kachikwu said".

I vaguely remember sparring with you in the past on this issue. My questions to you then went unanswered. Maybe you can answer them now. How much does it cost to produce and refine locally a litre of PMS here in Nigeria? We know the cost profile of a litre of imported fuel - we know the landing costs, distribution costs etc. and that's why we know without a shadow of a doubt that imported fuel is subsidized. But we do not have the same information about locally refined fuel. Why? Why hasn't your hero Kachikwu answered that question?

Doctors talk about evidence based medical diagnosis. It is time for us to have evidence based arguments.

grandstar:

By you suggesting government repair them, it shows you will repeat the very mistakes that plunged the oil industry into its present doom. The solution is to privatize the refineries, end fuel subsidies and deregulate fuel prices.

^^^
Your recommendations above turn on the key question of whether a subsidy on locally refined petrol actually exists. It is the first question that should be answered.

grandstar:

Why are you looking at Statoil or ARAMCO? Why are you looking at Norwegian solution to a Nigerian problem? Are Nigerians naturally law-abiding citizens?

^^^

And why shouldn't we look at Statoil and ARAMCO? When it comes to production, you believe the Norwegians and Saudis are from another planet. But when it comes to consumption - I'm sure you have no problem with German luxury cars and high end French wines/cuisine for those who manage your country's affairs. Make up your mind and hold them accountable.

grandstar:

The solution here is simple again: deregulate the price of fuel. Dangote's refinery is bigger than all government's 4 refineries put together. The private sector should take over.

^^^
I have no problem with private refineries. None whatsoever. SOEs running alongside private enterprise is nothing new - this is what exists among the Norwegians whose industry model you so casually dismissed as unworkable in our environment. Again I beg you Sir, make up your mind. You can't have it both ways.

festacman:

Far from "childlike faith", in any country and at any particular time, a set of people are trusted with making vital policy decisions in the best interest of that country. No matter how you throw tantrums about multiple exchange rates, the current appointed policy makers will have their ways. You can only trust their judgement and hold them responsible if things go wrong.

^^^
Throw tantrums?

I took the time and trouble to point out clear policy mistakes made by this administration and you have taken refuge in vague generalizations about policy makers "having their way". I am doing exactly what you say: holding them responsible - because things are going wrong. Your government has blown a hole (not the first time and not likely to be the last) through its foreign reserves in a vain attempt to defend a floundering currency. Take the medicine and move on!

festacman:

For Buhari's accomplishments, I take it that no president anywhere lacks a fair share of unrepentant critics like you. It is your right to hold your opinion just I am in the clear to hold mine. That's beauty of democracy.

^^^
We can agree to disagree - as you have said.

But you still haven't listed the administrations achievements.

Economists, simplify

Niggsrdumb:



True but 4 billion out of the total human population make less than 1.5 k dollars per annum.


Why is this so?

Lack of knowledge!

Other countries are giving stimulus packages to their citizens yet bloomberg want the Naira to fall freely. CBN's decision is the right move since they can't afford to give stimulus package to their citizens. It is a temporary fix to a temporary shock. Good move. our economy is peculiar because of the heavy reliance on crude proceeds and petroleum importation. We can't apply a conventional fix to our economy at this critical time. If CBN does not peg the Naira, then they can buy crude from us cheap but we buy petroleum and other items from them at a very expensive price since we are net importers.. Not good. The ripple effect will reverberate around the country and the only ones that will benefit are the people asking us to let Naira fall.

However, CBN must ensure that the cabals and "rountrippers" do not exploit this situation. That is the real danger. Those who would hoard only to resell in the parallel market.

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 2nd biggest economy in the world


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

DO not compare us with China, china has the capacity to back thier stands we do not all we have is OIL.

Mizwisdom:



So you agreed that America is a scam? If it wasn't for the dollar being a defacto currency, it would have been almost valueless by now so why Lord it over others to devalue when we all use their currency? they predict doom and gloom for others because they simply go and print more and more dollars to help them stay afloat. Allow others to extend some level of independence and stop this gloomy tales, nobody holy pass.

Madam
The mother of a promiscuous teenager is warned by a neighbor that if her daughter does not change her ways, she bound to become pregnant. The teenager mums curses the neighbor and says it is all her daughters that will get pregnant.

Was the neighbors speaking out of self interest or just stating the obvious?

We may not like economic reality but have to accept it.

Nigeria can't print money because the country suffers from double digit inflation. Only countries suffering from deflation or very low inflationary pressure can afford quantitative easing.

VolvoS60:


^^^
This is a serious discussion. Let's keep it that way - there's no room for this.


I am very sorry

[quote author=VolvoS60 post=87661115]
^^^
"Kachikwu said".

I vaguely remember sparring with you in the past on this issue. My questions to you then went unanswered. Maybe you can answer them now. How much does it cost to produce and refine locally a litre of PMS here in Nigeria? We know the cost profile of a litre of imported fuel - we know the landing costs, distribution costs etc. and that's why we know without a shadow of a doubt that imported fuel is subsidized. But we do not have the same information about locally refined fuel. Why? Why hasn't your hero Kachikwu answered that question?

Doctors talk about evidence based medical diagnosis. It is time for us to have evidence based arguments.


^^^
Your recommendations above turn on the key question of whether a subsidy on locally refined petrol actually exists. It is the first question that should be answered.



^^^

And why shouldn't we look at Statoil and ARAMCO? When it comes to production, you believe the Norwegians and Saudis are from another planet. But when it comes to consumption - I'm sure you have no problem with German luxury cars and high end French wines/cuisine for those who manage your country's affairs. Make up your mind and hold them accountable.



^^^
I have no problem with private refineries. None whatsoever. SOEs running alongside private enterprise is nothing new - this is what exists among the Norwegians whose industry model you so casually dismissed as unworkable in our environment. Again I beg you Sir, make up your mind. You can't have it both ways.

I will be brief

You asked how much does it cost to refine oil. I don't know if there is a magic number here. There might be.

Why do I say a magic number? Cost of refining based on what variable? Is it when the price per barrel is $10? $20? $25? $50? $100? $150 per barrel? It might have helped if you added this.

The reason why I asked the above to highlight to you some unreasonableness in your question. The price of oil is never static. It goes up and down every minute, how much more every month or year!

Again you ask me to prove if there's a fuel subsidy. Fuel subsidy based on what variable? Is it when the price of oil is $55 or when it is $25?
A teenage girl suddenly starts dressing skimpily and the father says he hasn't seen any concrete signs that his daughter has any interest in men. You asking me to show you proof of a subsidy is similar. The evidence around is so profound that it need not be brought up.

Dangote has already said he isn't selling his petrol at government determined price. That it will be based on the international price. Anybody who wants to sell at the government price can buy from him and do so. Please read this article https://www.theafricareport.com/418/nigeria-the-cost-of-cheaper-petrol/

The problem I see here is that you want very low petrol prices. That seems to be your prime objective. It is the wrong objective. It is incompatible with a vibrant oil industry as Nigeria has witnessed.

Your love for state-owned enterprises isn't realistic. Nigeria has proven to suck at it. Why hunger at what the country sucks at?

ARAMCO and GAZPROM aren't the paragons they claim to be. Their accounts are opaque. GAZPROM is notoriously corrupt. ARAMCO's only claim to fame is that it is the sole manager of the country's 100billion or so oil reserves.

It is extremely rare these days for State Owned Oil companies in OECD countries. Most have been privatised. America and Britain have none for instance. Your obsession with SOE may boil down to your quest for a very low fuel price. The ideal is for the fuel price to be market-determined, which means deregulated. That has happened with diesel already and petrol's turn will come one day.

saniby:

Voodoo economics if I may say. The fact that oil is @ $25 a barrel does not implies automatic devaluation of the Naira. Our demand for forex is also reduce. What are our major imports?... Refined petroluem products account for about 29.7% or $10.8bn in 2018. Are you guys suggesting this will remain static after the oil crash? ...No It will also crash! So we don't need $10bn to import petrol, diesel etc, may be about $6bn or less. And Dangote refinery is about taking off to completely remove that import component. Similarly, all other import sectors will slow down naturally or by fiscal policies on close scrutiny. Why then do we need to accept devaluation which will do a permanent damage to our economy? By creating panic and speculation, it give rooms for unwarranted devaluation of the Naira. The explanation of N 1,000,000 against $500,000 does not flow with me, because $$ is not a commodity it is currency. Even with commodities, if you get to a car showroom and want to buy 20 units of a particular brand and they have only 5 available, would they just hike their price because they don't have enough quantity? What these prophets of doom like Blomberg are asuggesting, cannot be accepted in any Western nations - UK, USA, France etc. In fact they will slam those currency speculators, sellers and buyers with charges of economic sabotage.
From the picture you are painting, countries like Nigeria will never have stable currency nor develop it's production base, because there a thousand and one tools available to the US for example, to set the economy tumbling -like sanctions, tariff etc
So our home grown solution will see us scale this once again. Don't fuel more speculation by lending support to Blomberg analysis.

I read in-depth what you wrote and it can be summed up in 1 word: devaluation

You don't want a devaluation of the currency. It is going to happen anyway. The fundamentals say so. Anyone who says the Naira will depreciate or must depreciate is considered your enemy such as Bloomberg or the IMF. Anyone who tells you the Naira won't depreciate is a liar.The only way the government can prevent that is to defend the rate by supplying the forex market all the dollars it needs. This will run down the reserves. It is unsustainable.

If the CBN refuses an official devaluation, a wide gap may open between the parallel market rate and the official rate in the event if the government isn't able to provide enough forex demanded by the market.

Stable currency? What is a stable currency? if the Naira remains at 360 to a $1 for the next 10 years, does that make it a stable currency?

PHijo:


All the countries you mentioned, their people share a lot in common. In Nigeria people know the country is fake. Patronage is what has helped the country remain one till date. The patronage has to stop or patronage will kill Nigeria! You can't keep on living fat at the expense of others.

Russians speak Russian, Saudi Arabians speak Arabic, Chinese speak Chinese, Norwegians speak Norwegian
and Nigerians speak...?

Do you get the drift?

Nigeria has two options, return it to the ethnic nations who own it or commercialise the entity. It will NEVER function as a government owned company under a ministry.

Nigerians speak ethnicity and religion. This contrapment is not a country, it's a conglomeration of ehnic nations and as such would eternally struggle to attain the elusive country status. The only language that unites her is looting.

grandstar:

I will be brief

You asked how much does it cost to refine oil. I don't know if there is a magic number here. There might be.

Why do I say a magic number? Cost of refining based on what variable? Is it when the price per barrel is $10? $20? $25? $50? $100? $150 per barrel? It might have helped if you added this.

The reason why I asked the above to highlight to you some unreasonableness in your question. The price of oil is never static. It goes up and down every minute, how much more every month or year!

Again you ask me to prove if there's a fuel subsidy. Fuel subsidy based on what variable? Is it when the price of oil is $55 or when it is $25?

^^^^
I will be brief too.

Having said the same thing over and over again I am exhausted. It is strange that you seem not to understand my very clearly explained points. But I'll do it one more time.

First of all, I am not just asking you for how much it costs to refine oil. I am asking you how much it costs to produce and refine a litre of petrol in Nigeria from Nigerian crude. There is a difference between the two. This information will let us know if there is a subsidy on locally refined petrol. Why is it so hard for you or Kachikwu or whoever to provide proof of this?

You have cleverly avoided the distinction between locally refined fuel and imported fuel because you know your argument falls apart once you acknowledge that the two are not the same. Nearly every Nigerian knows there is a subsidy on imported petrol - this information is in the public domain and there is nothing to argue about there. Every week or so the NNPC/PPMC website has data on the landing costs of every litre of PMS imported into this country. Every single week we get to know if this landing cost (plus distribution costs and any other associated costs) is greater than the controlled pumphead price of 145 Naira - and it usually is. But there is absolutely zero publicly available information on the cost per litre of PMS refined locally in Warri, Kaduna and Port Harcourt - be it today, last week, last year or the year before. Why?

By refusing to acknowledge that this country actually has refineries that refine fuel locally (however inefficient they may be) you devalue your argument significantly and blow your claims out of the water with your own hands. You forcefully state that there is a subsidy but you cannot quantify it. You don't have the numbers and yet you argue fervently that a subsidy exists. Who's the magician here? Who's being unreasonable here?

grandstar:

A teenage girl suddenly starts dressing skimpily and the father says he hasn't seen any concrete signs that his daughter has any interest in men. You asking me to show you proof of a subsidy is similar. The evidence around is so profound that it need not be brought up.

^^^^
This is the first time I have seen anyone draw an analogy between the sexuality of teenage girls and oil subsidy. Quite interesting but unfortunately it is highly inaccurate. No parallels between the two. None whatsoever.

grandstar:

Dangote has already said he isn't selling his petrol at government determined price. That it will be based on the international price. Anybody who wants to sell at the government price can buy from him and do so. Please read this article https://www.theafricareport.com/418/nigeria-the-cost-of-cheaper-petrol/

^^^^
Dangote is a free agent. I would assume Nigerians do not have any problem with his private enterprise. I would wait until the refinery is operational before saying much more. My views on this are covered in an older thread. By the way, what market structure will the industry have once the refinery is up and running?

grandstar:

The problem I see here is that you want very low petrol prices. That seems to be your prime objective. It is the wrong objective. It is incompatible with a vibrant oil industry as Nigeria has witnessed. Your love for state-owned enterprises isn't realistic. Nigeria has proven to suck at it. Why hunger at what the country sucks at?

^^^^


I don't have any love for SOEs per se. All I'm doing is calling out mismanagement, full stop. My real objective is holding government accountable!

Nigerian governments according to you, 'suck' at managing SOEs. But why would you then trust them to competently run a federal bureaucracy, public healthcare infrastructure, a public education system and a standing army? Are the management skill sets that dissimilar? Let me ask you a question: what are your views on privatizing the military - after all, doesn't the government suck at managing that too?

grandstar:

ARAMCO and GAZPROM aren't the paragons they claim to be. Their accounts are opaque. GAZPROM is notoriously corrupt. ARAMCO's only claim to fame is that it is the sole manager of the country's 100billion or so oil reserves.

^^^^
I notice you conveniently omitted Statoil. Why?

grandstar:

It is extremely rare these days for State Owned Oil companies in OECD countries. Most have been privatised. America and Britain have none for instance. The ideal is for the fuel price to be market-determined, which means deregulated. That has happened with diesel already and petrol's turn will come one day.

^^^^
This is a whole new topic that deserves its own thread.

grandstar:


I read in-depth what you wrote and it can be summed up in 1 word: devaluation

You don't want a devaluation of the currency. It is going to happen anyway. The fundamentals say so. Anyone who says the Naira will depreciate or must depreciate is considered your enemy such as Bloomberg or the IMF. Anyone who tells you the Naira won't depreciate is a liar.The only way the government can prevent that is to defend the rate by supplying the forex market all the dollars it needs. This will run down the reserves. It is unsustainable.

If the CBN refuses an official devaluation, a wide gap may open between the parallel market rate and the official rate in the event if the government isn't able to provide enough forex demanded by the market.

Stable currency? What is a stable currency? if the Naira remains at 360 to a $1 for the next 10 years, does that make it a stable currency?

I acknowledge that if the low oil prices continued for long and coupled with the skewed way International economy is run, the Naira will suffer devaluation. But what of if things begun to turn around sooner than expected? Can you reverse the damage to the purchasing power of Nigerians courtesy of your prescription? The point is very clear, devaluation will worsen the economic fortunes of the nation, weaken the purchasing power of the people and send inflation to the roofs. The twix is that, either way - High or low oil prices, there will be turbulence for Nigeria's economy any time the oil prices fluctuates.
For me, economics remains a science, as such there are varying ways to solve every problem it poses. The agents of the west will perpetually prescribe those solutions that will make you weaker against them. The Chinese for example realized that early enough, but hey, they were branded currency manipulators by the US. But truly speaking that's the only way to win back your hard labor from the west - using unconventional ways to solve economic challenges. The Forex restriction policy was very successful as it formed the convergence to about N360/$ else give the free floating of the Naira some of you were suggesting then, the exchange would've reached N1000/$ or more.
So why are you posing DEVALUATION as our only option, when we can equally restrict imports, continue with our backward integration and import substitution policies to tame the high Forex demand.
Have Nigerians no other option that to give FOREIGNERS MORE OF THEIR HARD EARNED NAIRA FOR FEWER DOLLARS?

nedekid:

So is what they are saying true or false? They predicted naira will be devalued, fgn said na lie. Some people decided to buy usd. Last last has naira not been devalued? And from prediction by the "nagative" writers in your own words, the Naira will be devalued more!
The fact that one places a hood over his head does not mean the sun is not shining bright. Ie deceive yourself but the fact still remains.

It is a disgrace when the IMF or Bloomberg have to spell out the obvious in the first place. How will the Naira not eventually devalue when it suffers from inflationary rates? How won't it eventual depreciate when there's persistent excess money in circulation? Why won't it depreciate when the government spends 70% of the budget on debt servicing? The oil price crash just sped up the process.

Commonsense should inform one that the oil price crash will lead to a devaluation. That has always been the scenario.

grandstar:


It is a disgrace when the IMF or Bloomberg have to spell out the obvious in the first place. How will the Naira not eventually devalue when it suffers from inflationary rates? How won't it eventual depreciate when there's persistent excess money in circulation? Why won't it depreciate when the government spends 70% of the budget on debt servicing? The oil price crash just sped up the process.

Commonsense should inform one that the oil price crash will lead to a devaluation. That has always been the scenario.

Well said boss.
You seem to be knowledgeable about the economy.
My question is that people that have little savings in domiciliary account in $£. How safe are those? Will one have acess when it is demanded? Is it better to get it out and keep in cash?

nedekid:

Well said boss.
You seem to be knowledgeable about the economy.
My question is that people that have little savings in domiciliary account in $£. How safe are those? Will one have acess when it is demanded? Is it better to get it out and keep in cash?

The money is 99.9% safe.

During the last recession caused by Buhari forex control policies, the domiciliary accounts weren't raided despite the biting forex shortages his reforms brought. At that time, there was $19bn in them.

grandstar:


It is a disgrace when the IMF or Bloomberg have to spell out the obvious in the first place. How will the Naira not eventually devalue when it suffers from inflationary rates? How won't it eventual depreciate when there's persistent excess money in circulation? Why won't it depreciate when the government spends 70% of the budget on debt servicing? The oil price crash just sped up the process.

Commonsense should inform one that the oil price crash will lead to a devaluation. That has always been the scenario.

Hmmn... Some people think IMF have an almighty formula to economic woes. There is no fixed way of solving scientific problems, please. Economics is a Science, treat it as such.
For instance, In 2018 according to World Bank, Nigeria imports about $43bn with a trade surplus of about $20bn. We can effectively say that our average monthly imports is about $3.58bn per month. Now our Foreign reserve stood at $36.69bn as at 25th February 2020. So at the rate of import above, assuming no further Forex inflow into the country, we can finance trade for only 10 months, but with some restrictions, this can fund over 1 year of imports.
Now, what happen to our exports? Oil being at 90% of our Forex earner is forecast to generate about 0.5*52.9*0.9 or about $23.8bn while the non oil will account for about (10%) or $5.2bn this will give us a Forex inflow of about $29bn in 2019.
What of capital inflow from portfolio investors, FDi, Diaspora remmitances etc? So you can see it's not a doom as you guys are painting it. Moreover we do not expect the oil prices to remein so low for more than 20 months. So we are not doomed economically, but some people want to rob us of our hard earned Naira.

Now, when you devalue the Naira, you completely distort the market prices - inflation will follow and the economy will take further 2-3 years to converge again. Possibly by then another shock could happen - increase or decrease in oil price. Relatively Stable Naira is critical to our development as a nation.
I firmly submit that Nigeria has what it takes to support and maintain the current exhange rate (360-365) for the next 24 months. This is far better than devaluating the Naira impoverishing further the already poor Nigerians.

saniby:

Hmmn... Some people think IMF have an almighty formula to economic woes. There is no fixed way of solving scientific problems, please. Economics is a Science, treat it as such.
For instance, In 2018 according to World Bank, Nigeria imports about $43bn with a trade surplus of about $20bn. We can effectively say that our average monthly imports is about $3.58bn per month. Now our Foreign reserve stood at $36.69bn as at 25th February 2020. So at the rate of import above, assuming no further Forex inflow into the country, we can finance trade for only 10 months, but with some restrictions, this can fund over 1 year of imports.
Now, what happen to our exports? Oil being at 90% of our Forex earner is forecast to generate about 0.5*52.9*0.9 or about $23.8bn while the non oil will account for about (10%) or $5.2bn this will give us a Forex inflow of about $29bn in 2019.
What of capital inflow from portfolio investors, FDi, Diaspora remmitances etc? So you can see it's not a doom as you guys are painting it. Moreover we do not expect the oil prices to remein so low for more than 20 months. So we are not doomed economically, but some people want to rob us of our hard earned Naira.

Now, when you devalue the Naira, you completely distort the market prices - inflation will follow and the economy will take further 2-3 years to converge again. Possibly by then another shock could happen - increase or decrease in oil price. Relatively Stable Naira is critical to our development as a nation.
I firmly submit that Nigeria has what it takes to support and maintain the current exhange rate (360-365) for the next 24 months. This is far better than devaluating the Naira impoverishing further the already poor Nigerians.

I noticed you keep using the phrase "when you devalue the Naira", as though it is the government that "devalues the currency". The depreciation isn't the work of the CBN but of the market. The market has the final word. The best Central Banks can do is to influence the markets but at a point, they too throw in the towel.

The Swiss Central Bank spent $30bn trying to prevent the Swiss Francs from appreciating (opposite of depreciating) because it would hurt its export competitiveness. Then investors were fleeing the dollar and other currencies and were putting money into the Swiss Francs which made it appreciate.

Eventually, the Central Bank could no longer afford to stop the appreciation and threw in the towel.

In 1992, the Bank of England, the Central Bank of the then 4th largest economy of the world was powerless to stop the Pound Sterling from devaluing when the market went against it.

The Naira started depreciating on its own and the Central Bank too seems powerless to stop it. It could fight it but it would mean running down the foreign reserves. It is going to lose with nothing to show for its effort.

When Buhari came in 2015, the first thing he did was to fix the Naira at 197 to a $1. He did so to stop the Naira from depreciating further. The Naira had started depreciating from August 2014 when the price of oil started coming down. It went from about 160 to 197 or so by May 29, 2015, when Buhari took over. The price of oil had been falling and with it, the Naira. It fell from about $100 in August 2014 to around $50 by May 29, 2015 when Buhari assumed office.

Buhari immediately pegged it at 197 as he does not believe in devaluation. Yes, it stayed ay 197 at the official rate but what happened at the parallel market? When the government could not supply enough dollars at 197, buyers turned to the parallel market and the rate there hit 300 by December. It was the fastest depreciation ever seen. By May, 2016, it had touched 360. So, the official rate was 197 while at the black market it was 360.

Roundtripping ruled the day. People simply bought forex at the official rate and sold at the black market rate. Sanusi, Soludo and the organised private sector urged government to make the exchange rate flexible again, just the way Buhari met it before he messed it up. Currencies are commodities and they will always go up or down. No currency is immune.

In the mid 1990's, the US$1 could buy 1.30 Euros
By Mid 2000's, 1 Euro could buy $1.30
That means the US Dollar lost about 50% of its value over 10 years.

It is better to accept a devaluation. It is the lesser or even far lesser of 2 evils. Many times, it isn't even considered an evil as it helps the productive side of the economy. It is consumption that suffers as it cuts the spending power of of the people. A weaker currency helps to reduce imports and makes locally made products more competitive to locals and foreigners.

Buhari's bad forex policies led to severe forex scarcity as no one in his right mind wanted to sell dollars at 197 when the parallel rate is 360. Supply dried up from the private sector. Buhari said that despite the forex shortage, there was $19bn in private dormiciallary accounts in the country.

Eventually, the policy was discarded with the introduction of 2 exchange rates. The official window at 305 and the import-export window of 360 which is the real exchange rate. Buhari was advised to ditch a dual exchange rate policy put he won't listen. This simply helps roundtripping. If you believe any good you buy outside is priced at 305, you're on your own. Maybe petrol.

grandstar:


I noticed you keep using the phrase "when you devalue the Naira", as though it is the government that "devalues the currency". The depreciation isn't the work of the CBN but of the market. The market has the final word. The best Central Banks can do is to influence the markets but at a point, they too throw in the towel.

The Swiss Central Bank spent $30bn trying to prevent the Swiss Francs from appreciating (opposite of depreciating) because it would hurt its export competitiveness. Then investors were fleeing the dollar and other currencies and were putting money into the Swiss Francs which made it appreciate.

Eventually, the Central Bank could no longer afford to stop the appreciation and threw in the towel.

In 1992, the Bank of England, the Central Bank of the then 4th largest economy of the world was powerless to stop the Pound Sterling from devaluing when the market went against it.

The Naira started depreciating on its own and the Central Bank too seems powerless to stop it. It could fight it but it would mean running down the foreign reserves. It is going to lose with nothing to show for its effort.

When Buhari came in 2015, the first thing he did was to fix the Naira at 197 to a $1. He did so to stop the Naira from depreciating further. The Naira had started depreciating from August 2014 when the price of oil started coming down. It went from about 160 to 197 or so by May 29, 2015, when Buhari took over. The price of oil had been falling and with it, the Naira. It fell from about $100 in August 2014 to around $50 by May 29, 2015 when Buhari assumed office.

Buhari immediately pegged it at 197 as he does not believe in devaluation. Yes, it stayed ay 197 at the official rate but what happened at the parallel market? When the government could not supply enough dollars at 197, buyers turned to the parallel market and the rate there hit 300 by December. It was the fastest depreciation ever seen. By May, 2016, it had touched 360. So, the official rate was 197 while at the black market it was 360.

Roundtripping ruled the day. People simply bought forex at the official rate and sold at the black market rate. Sanusi, Soludo and the organised private sector urged government to make the exchange rate flexible again, just the way Buhari met it before he messed it up. Currencies are commodities and they will always go up or down. No currency is immune.

In the mid 1990's, the US$1 could buy 1.30 Euros
By Mid 2000's, 1 Euro could buy $1.30
That means the US Dollar lost about 50% of its value over 10 years.

It is better to accept a devaluation. It is the lesser or even far lesser of 2 evils. Many times, it isn't even considered an evil as it helps the productive side of the economy. It is consumption that suffers as it cuts the spending power of of the people. A weaker currency helps to reduce imports and makes locally made products more competitive to locals and foreigners.

Buhari's bad forex policies led to severe forex scarcity as no one in his right mind wanted to sell dollars at 197 when the parallel rate is 360. Supply dried up from the private sector. Buhari said that despite the forex shortage, there was $19bn in private dormiciallary accounts in the country.

Eventually, the policy was discarded with the introduction of 2 exchange rates. The official window at 305 and the import-export window of 360 which is the real exchange rate. Buhari was advised to ditch a dual exchange rate policy put he won't listen. This simply helps roundtripping. If you believe any good you buy outside is priced at 305, you're on your own. Maybe petrol.

The same rhetorics. You have not explain how devaluation will ever help the consumption based Nigerian economy. How?? More costly machinery, more costly raw materials and labor agitation for more pay. Inflation will abound and the economy will slow down leading to more poverty and deprivation, which in turn fuels insecurity...this will be the end result.
I'm not expecting fixed value for the Naira for a 50 year period! No. what I expect is for the economy to have resilience to keep exchange variations within acceptable limits. There will always be transients with every natural system model. But you don't allow transients to define your rates, because they are temporary. Rather, you protect against them till you reach convergence.

What happened with the Naira in 2015 was due to some people in government that heeded to the advice of some of you (advocates of free floating the Naira), that was what saw the Naira crashing to about N500/$ in the parallel market. If not for the quick reversal and depending, it could've reached N1000/$. Why, because you cannot satisfy the round-trippers who are non productive lot surviving only on speculations. They are aide in Nigeria by some economists that want us to wear an overcoat in a hot sun.
Already some of them are speculating the Naira as over valued. The likes of Kingsley Moghalu, said it should have a value of about N400/$. Then the parallel market value should be how much,.....? Fill in the gap pls.

We have to operate within peculiarities of our environment, and not be relating our case to a case study of entirely different environment.
We've never had a single exhange rate in Nigeria, not for as long as I can remenber. There is always PARALLEL market rate. It is mainly these parallel operators that fuels speculations leading to uneven devaluations. Actions of such speculators in the climes you mentioned above could have earned them jail terms and wealth confiscation, for their role as economic saboteurs.
But here we allow people who cannot play by the rules, to trade in our currency at our detriment.
Can you buy Pound Sterling at rate other than the market rate in the UK just because you are desperate? Or can you sell it at any rate you wish?

WE MUST PROTECT OUR NAIRA AGAINST THESE UN-NATURAL FORCES.