cap28: The handwriting is on the wall for the US dollar, it is now in its final death throes, no amount of printing of money by the Federal Reserve will save the US dollar from its imminent crash.

Nigeria is not the only country that is trying to dump the dollar, there are many other countries doing that behind the scenes and I can only imagine the level of panic going on now with the US govt.

This is definitely a good move by Nigeria and it indicates that many other country may already be doing the same thing.

For those who keep sayign that the crash of the US dollar will pull down the Remnimbi with it please be aware that China is currently trading with other far east asian countries, the EU , Australia and many african countries using its own currency , therefore its loss of the US market will not be as detrimental as many think,.

Many keep talking about how the Remnimbi is manipulated by the Chinese - so ? isnt the US dollar manipulated by the Federal Reserve? Why does the Federal Reserve keep printing money in order to assist the US govt in paying its bills - is it normal for a country that spends more than it earns to print money in order to pay its debts - is that not a form of currency manipulation and anyway the Chinese do not manipulate their currency they simply peg its exchange rate to the dollar in order to keept its exports cheap and affordable for its export market.
Which is worse? - printing your currency because you dont earn enough money thereby artificially inflating the value of your currency or keeping the true value of your currency low in order to increase exports of your products?

This situation was predicted about 2 years ago by many leading US economists and it is happening just the way they said it would.

Why should China and the rest of the world continue to trade with a country that purchases most of its imports on credit ? The US has been cheating the world and growing fat off the sweat of other countries of the world simply because the dollar is the world reserve currency and that is now going to be brought to an abrupt end.

The US is just going to have to learn to cut its coat according to its cloth, you cant keep buying things on credit and expect the world to keep you afloat, the US is simply not earning enough to keep up with its ridiculous spending sprees and now many of its creditors are finally coming to their senses and they are saying hey, enough is enough, if you dont earn enough then we are going to cancel your credit card until you learn to conduct your affairs like a responsible adult.

It will be interesting to see how the US reacts to Nigeria's move - i forsee extreme hostility on the part of the US govt.

You conveniently ignored two key points in your analysis:

Firstly, Chinese exports over $450 billion worth of goods to the US every year. Which other market in Asia can absorb potential loss for China should the US currency collapse?

Secondly, China holds $1.1 trillion in US treasury bonds because they are confident the US will always meet its debt obligation. Besides, where else can they park their increasing export revenue?

So China will do anything (including praying) that the US dollar does not fall relative to Rhimbibi. Yet, our too-clever-by-half theory only CBN economist are betting that dollar will collapse.

A collapse in dollar will send world economy into a tailspin. FACT

Jokerz, Bunch'a failed economist we have in this country.. Trial and error people.. Instead of them to practice economics with time tested principles... They prefer trial and errors.. That's how they said polymer notes were far better than paper notes and used tax payers money in experimenting, nao they have to reverse to paper notes.. Everywhere in the world.. Paper notes is what's widely recognised..

Most major countries has their reserves in the United states dollars.. America is world power and would remain so for years to come..

Temporary govt shut down in america or issues of congress debating debt ceiling is pusing these our economist to opt for the chinese currency as our reserve currency but they fail to remember that worlds acceptable tender benchmarked against commodities, indicies, futures, options, stocks, bonds, crude oil, gold, copper even currencies are paired majorly against the US dollarz.. When they run to china, they'l still come back to ask that the dollar.. That same American currency is the worlds legal tender.. Even if America fails, it would suprise them to know China isn't the next world power even if they sit second to America.. Well I wish Tunde Lemo and his boss well in running nigeria's economy based on trial and error.. A central bank that bearly knows her function.. They should copy from the Federal Reserves bank of America.. Their piority is creating jobs and stimulating the economy.. Our central bank is never talking of Job creations.. Never ever, agriculture is dwindling by the day, CBN is just a figure head doing trial and error economics not even time tested and proven and tested economic principles..
If they like they can change our reserves to indian rupee, who cares..

bookface:


Between May and September this year, emerging markets stocks fell by close to 20%, do you know why? Because the US Federal reserve threatened to shut the printing press!! -

Brazil, Russia, and India all had a crash in their currencies - see charts below (for russia, india and brazil)! China didn't because it's pegged against the dollar, but the effect set back china's growth (see chart below for China). It's simple - if the US shuts the printing press, funds will flow out of Emerging Markets back into the dollars! In September when the fed promised to keep printing money, the emerging market currencies rallied again from their record lows.

Emerging Markets actually need the US to keep printing money, else the IMF forecasted that several emerging markets could fall straight off into recession - particularly for countries like Russia and India. - These countries depend on foreign fund flows to keep their economies strong.

Additionally, printing money does not really increase your debt. With a debt that huge, the US will never pay it back! It can only do two things - either default on it, or inflate it away. The US is never going to default (or so it's assumed) so it's eventually likely to inflate it all away.

Finally you should know that most of US debt is owed to the US government itself. The US Federal reserve holds roughly 16% - so effectively the Federal reserve lends money to the treasury and the treasury pays interest to the federal reserve.....

I concur with this great analysis. Even with the threat of downgrad by the Credit rating agencies, countries continue to invest in US Treasury bills

People really overestimate the Chinese economy. China is just a manufacturing hub for the ever growing US consumers. Finito.

Ugosample: True talk. If the USA tags China officially as currency manipulators, their advantage is gone, and that would mean serious trouble for Chinese goods coming to the US.

if this happens US will lose more cos Chinese can easily adapt to their former life style as 3 rd world country but US can't. That is why US will think twice in crashing the world economy cos of china.

eduson33: good move.

usa is gonna be restless now.**if africans can pull themselves out of westernized political entailment ,we wont remain the same.
it takes political inconcombility to understand what nigeria is about to do.
but we gat to be careful***that country can do anything for their own interstitial achievement
.

^{someone needs a dictionary}

Well Said!

Today the U.S government has come up with a debt figure thats more than $20 trillion , today U.S have more government debt than any country in the history of the world. The implication of Federal government gradual moving of our foreign reserve is but for one reason which is for the fact that: "the U.S government is getting perilously close to loosing it status as the world reserve". And Nigeria like many nations of the world dont want to be cut unprepare.

Political suicide. Why not hedge it in metals such as gold silver, nickel instead of another country's currency? Let us learn from the Asian crisis of the late 90's where the countries in the ASEAN region did the same and when the dollar crashed,the portfolio investors moved out trillions with computer clicks. We all know the outcome.

kizito047: End tym tinz




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BRB

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I dont see anything good in this. Africans are still parading themselves like slave. And morealso, chinese are not to be trust. The want to increase the power rate of their currency.

Most people commenting here have no idea how monetary policies work talk less of a country's foreign reserves. This is a very good move if it can be implemented but im aprehensive, the U.S wont take this lying low, not a major economic force in the African continent like Nigeria which has major influence doing this to them, it could spell doom either for the political class or the nation as a whole. I read a report sometime back that the main reason America invaded Iraq wasnt because of WMD's which we all know now never even existed but rather this same move to change foreign reserves from the dollar to Chinese currency. Such a move would have shattered the American economy then because of its domino effects but it can also worry the Americans now. Lets just watch and see. I would prefer gold bullion.

talktimi: Most people commenting here have no idea how monetary policies work talk less of a country's foreign reserves. This is a very good move if it can be implemented but im aprehensive, the U.S wont take this lying low, not a major economic force in the African continent like Nigeria which has major influence doing this to them, it could spell doom either for the political class or the nation as a whole. I read a report sometime back that the main reason America invaded Iraq wasnt because of WMD's which we all know now never even existed but rather this same move to change foreign reserves from the dollar to Chinese currency. Such a move would have shattered the American economy then because of its domino effects but it can also worry the Americans now. Lets just watch and see. I would prefer gold bullion.

at this point the american government wont be able or be ready afford going into battle not for anything, the more they couldn't attack north korea them syria. they were busy feeding their citizen based on credit but expend their investment on wars, hence the return. the possibility of u.s. government attacking Nigeria is 0, our major concern should be these collection of dummycrafts and drones governing us.

Good policy. Let us see how it pans out.

Good move but a stupid one

talktimi: Most people commenting here have no idea how monetary policies work talk less of a country's foreign reserves. This is a very good move if it can be implemented but im aprehensive, the U.S wont take this lying low, not a major economic force in the African continent like Nigeria which has major influence doing this to them, it could spell doom either for the political class or the nation as a whole. I read a report sometime back that the main reason America invaded Iraq wasnt because of WMD's which we all know now never even existed but rather this same move to change foreign reserves from the dollar to Chinese currency. Such a move would have shattered the American economy then because of its domino effects but it can also worry the Americans now. Lets just watch and see. I would prefer gold bullion.

May be you should tell us how "monetary policies work" instead.

Meanwhile, for the second time, it is elementary finance to not put all your eggs in one basket.

The US is in real big time s h i t right now.

Your invasion theory is flawed.

America is in no position to invade even Suriname right now.

Reason(s):

a) The Nobel Peace Prize for Obama was to silence him. Call it "pre-emptive blackmail" if you will. It was an anti - invasion vaccine.

b) Americans are war-weary now than ever before. Except a direct military assault on the homeland or military base abroad, even a tiny Island somewhere can taunt Uncle Sam now.

c) The current democratic leadership prefers what they called "soft power", a euphemism for internal destabilization of enemy/rival countries. The Arab Springs of this world. That's the worst they can do in Nigeria anyways and they have been doing that for eons now, including "predicting" that Nigeria will cease to be in 2015.

d) The deep economic quagmire has led to them desperation and paranoia; phone tapping of even their allies, global internet surveillance programs etc. Desperate people are never stable, they are rattled and hardly have time to think through anything, although they are dangerous.

d) Internal political and civil strive. The battle is just beginning, I would wager that in the coming months, when the Chinese and the EU have got a sort of solution to the "dollar question", America will default on its payment obligation. The so-called "full faith and credit" of the US is gone.

e) We are in the post Wikileaks/Edward Snowden world order. Nations and countries intelligence have at least an idea of what the Super Power's defense look like.

f) Finally, it is all about CASH, when you don't have cash people desert you, it's not their fault that you became foolish with your resources. While it's arguable that human beings can be ingrates sometimes, it is also true that survival/self preservation is the first law of nature.

Meanwhile, America has too many things to think about at this period than invading Nigeria for trying to protect herself from their (America's) profligacy.

What you are seeing here didn't start today

It is what (inter)national leaders and business persons have said for years.

Countries, from France, to Russia, to China, to Australia etc have been divesting their assets from dollar to something else.

To get the background to this, quickly go through the links below.

Angela Merkel in the year 2008 http://www.ft.com/intl/cms/s/0/e361d344-bc0c-11dd-80e9-0000779fd18c.html?nclick_check=1&siteedition=intl#axzz2iSMgPLqq

This is Sarkozy in 2009 http://online.wsj.com/news/articles/SB125131633754761451

Russia 2009 http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahoIPyEdpHUI

Analysts 2009 http://online.wsj.com/news/articles/SB125122938682957967

This is the United Nations (yes, the UN) in 2010 http://edition.cnn.com/2010/BUSINESS/06/29/un.report.dollar/?hpt=T2

Analyst 2011 http://online.wsj.com/news/articles/SB10001424052748703313304576132170181013248

Australia 2012 http://www.ft.com/intl/cms/s/0/4b6c4ab6-7404-11e1-bcec-00144feab49a.html

Australia 2013 http://online.wsj.com/news/articles/SB10001424127887324874204578441872296832546

Australia 2013 http://usa.chinadaily.com.cn/epaper/2013-04/10/content_16390047.htm

France 2013 http://europe.chinadaily.com.cn/epaper/2013-04/19/content_16422171.htm

Many Nigerians, especially those living in America and Europe, are still fixated about the omnipotence of the Super Power. It is not really a bad thing to be loyal to your hosts, but wake up guys. The world is moving on.

I hope it is not an avenue to loot

The entire economic system is currupt. We rely on a piece of paper for so much. The currency system has its flaws. What if we lived in a wworld without any currency?

Youtube search michael tellinger he talks about moneyless economy. Also search on youtube for participatory economy.

I'm not sure Gold is a better option. This is because its value is directly tied to the weakening dollar. It would end up being the same as having our reserves in US dollars. The Chinese currency is less under the control of the US, hence its choice. I'm sure Mr Uche Orji thought of the Gold option but decided to opt for the Renmobol because of the reasons stated.

Best thing, convert a third to chinese currency, another third to precious metal and leave the remaining third in USD.