This an interesting article I came across talking about how CBN can strengthen the Naira and avoid blocking Naira debit cards abroad.




July 7 (Lagos) - CBN has directed banks to block any international transaction on a Naira based debit/credit card or face fines. This is just 3 months after it reduced the limits on foreign transactions.



Obviously the CBN is desperate to protect the Naira value which is going down the drain everyday. Naira hit 230 against the USD on the BDC market today and some people are even calling it a recovery that's how bad it is.



So is the CBN missing the point that Naira is not going to be saved by such gimmicks which instead of saving foreign exchange make it difficult for Nigerians to travel abroad and force them to go to the black market to source for foreign exchange. The CBN is actually promoting black market by blocking usage of debit cards abroad. Some are expecting that CBN will soon stop western union transfers abroad in another step to protect the Naira.




Meanwhile there is a much better alternative that the CBN can use to start strengthening the Naira and it is a tried and tested method that works every time.



Increase the benchmark lending rate. It is currently at 13% and it is clear that this rate has to go up in order to make savings attractive in Nigeria.







Many banks are offering savers just 2-3% interest on savings so why would somebody save in Naira when the currency is going to de-value by 20-30% every 3-4 years?



Increasing the key benchmark lending rate to say 20% will make Naira stronger overnight. May be that is the bitter pill that the CBN needs to feed us instead of these irritants like you cant use debit card abroad.



Yes you may say that such a move will have many repercussions. It will make borrowing more expensive for businesses and individuals and may lead to inflation in short term. But on the other hand it will lead to more savings and the currency will get stronger. That is the call of the hour and the CBN should act when it still can and not when Naira has reached 300 because it will get there very soon unless CBN does something.



And once the Naira has become stronger, the new government has replenished lost reserves, the benchmark lending rate can be reduced to a more acceptable level. This is what Russia did just last year and this is what most countries do to strengthen or weaken their currencies. Even the legendary CBN governor Lamido Sanusi was quick to raise the benchmark lending rate to 12.5% in October 2011 when Naira experienced extreme shocks and he was able to protect the currency by that means.




In my opinion the CBN Governor needs to consider such a proposal as written in this article. If he continues to back the ongoing proposals then the calls for his ouster will only become louder. We need a CBN Governor (think Lamido Sanusi) not a dictator who decides ad-hoc when we can use our atm card.





reporting for easykobo.com on Tuesday, July 7 2015 from Lagos, Nigeria










This was an opinion of a private analyst who wants to remain anonymous.






http://www.easykobo.com/News.aspx?id=10046

Why are u writing like a retard?

sorry but I fixed it was copying from that website

this should be on front page ...people need to read this piece but then again most Nigerians don't understand hoot about economics.

Naira is 230 and we cant use use our atm card in London which kind atm card be that

oya mods fp this make we yarn cbn small

With the way things are going I don't think these guys knows the meaning of economy as regards to the Nigerian economy. All they know is quote figures & make forecast while we hope for the best, or are they going to blame it on GEJ & his administration this time around.

Makes Sense