Buoda barcanista
How market?

The problem with Nigerians is that we are too emotional. People are blinded by the short term rise in the value of naira in the BDc but forget that the so-called value is useless and will not affect anything all because the so-called rise was as a result of backyard policy and not due to the market forces. They also forget that the policy will create scarcity of the dollar in the market on the long run which in-turn will skyrocket the dollar value in the market. I have NEVER seen where this pattern was adopted in the whole world.

Rose2014:


Great observation.

Point number 1 attracts point number 3 and the rest is history

By the time this govt is done with this lame attempt at appreciating naira, N500 will equal $1
Atimes I wonder if these guys understand economics at all or they got into their positions through the back door

Mynd44:

If you read the OP well, there is actually no point to address. Most of it is philistinism.

If there is any issue to be raised it has to start from when the Naira started falling and it got devalued, then we take why the CBN was defending the Naira and then the recent desperate moves the CBN has taken.

That is the reasonable debates but since the OP has personally decided to leave some vital parts out (either cos he does not know or cos he is avoiding them) what should anyone discuss?

scarcity of the dollars is caused by unavailability of it. It is unavailable because CBN tightened the policy and banned 41 products category importers from accessing forex and these importers sourced for it in the black market so they can channel to nearly countries to continue their businesses. That is the reason, then the speculators decided to buy and hoard in anticipation of making a kill with it. Keep an open mind, that which you seek will only be known to you when you stop thinking you are always right.

This man you are becoming a nuisance.

Why do you wish your country bad?. Just because you want Buhari to fail?

barcanista:
Is the value of the Naira really appreciating in the real sense or the CBN and the FG are playing pranks on Nigerians? Why are commodities still high in the market?

Ideal Situation
Ideally, customers operating domiciliary accounts will go to the banks, deposit their dollar and through that account they do whatever transaction that they deem necessary. The Banks inturn will take the dollars(and other foreign currencies) to the CBN.

The Buhari/Emefiele Situation
1. The CBN has stopped receiving dollars from banks, as a result the banks has stopped accepting dollars at the counter because their vaults are full.

2. Because of the restriction at 1(above) the demand for dollar reduces in the BDC. The BDCs seek every means to trade the currency including reducing the cost at the black market. The CBN will go to the press to scream "NAIRA IS APPRECIATING."

3. As a result of 1(above) the banks also refuse to request dollars from the CBN's foreign exchange reserve. The CBN will then come out to scream "RESERVE IS GROWING".

Is that the best way to manage the naira?

Salient Question and Effects:
1. What happens to a businessmen with domiciliary account seeking to deposit dollars and transfer to their partners abroad after buying the dollar from BDC or Bank?

2. The bank's refusal to accept dollar deposit means business transaction on that will be halted. Because no domiciliary account holder will be willing to withdraw from his account when he knows that he won't be able to make further deposit due to the CBN's policy except if his intention is solely for converting the dollar to naira for local transaction.

3. Instead of doing transactions from domiciliary account, businessmen will be left with no choice but to operate domiciliary account in neighbouring countries where they will be making transactions or resort to wiring money via Western Union in neighboring country.

4. As a result of 3(above) the cost of commodities will go UP because businesses will make up for the extra expenses. Also, that will mean reduction in business activities in the banks.

5. Should the above persist it will get to a certain point where there will be scarcity of the dollar in the market. When it get to that point, the dollar rate is astronomically shooooooot up in the market because demand will outweigh supply. At this point, the naira problem will be worse than it was.

Is The Naira Really Appreciating?
Make no mistake, the naira-dollar rate is yet to appreciate in the international market. As at May 29 the naira/$ rate was N199 in the market. The rate as at today Aug 5, 2015 is still N199. You can't appreciate a currency via the backdoor. Even the black market rate cannot be regulated through the back door.

What "Sane" Countries Does:
The CBN Governor Godwin Emefiele made it look like one can't deposit foreign currencies in cash in another country. This is contrary to the facts on ground. No country will shut down foreign currencies transactions in banks. Let me give two instances...

On February 27, 2015, the Central Bank of Egypt instituted a new policy to help the Egyptian pound. As part of the policy, Individuals and businesses are allowed a maximum of $10,000(or equivalent) deposit daily and $50,000(or equivalent) monthly. The measure would stop companies from buying large amounts of dollars from the black market and then depositing them briefly in banks in order to open letters of credit for imports.

In China the maximum daily deposit/withdrawal of foreign currencies is $10,000(or equivalent).

Is it not better to place a transactional limit for foreign currencies than discourage deposit completely(that will solve nothing)?
We don't produce, we import, we have no policy to promote local production nor infrastructures in place toencourage manufacturers, yet we expect the naira to appreciate. That is no done anywhere.


I will be glad to get the views of others.


God Bless Us All

I love this guy , he sabi book wella , not dat APCs wailers

LOL

This WAILER's career is definitely diminishing.

4 pages and just 24 LIKES.




Jobless Mofo.

Wishing DOOM for your country because 1mbec1les will praise you for writing essay.

This is a short term measure to lower the pressure on naira

Yet to see an intelligent rebuttal of the facts posited by barcanista, all i see is people dancing around the issue and trying hard to sound intelligent while at it.

Like I said before, it's ONLY a matter of time before the bubble burst..

Barcanista
What is your point exactly?! because all you have done here is to wail about govt's intervention on saving the Naira but you should remember that for every decision there is always a down side.
Now does the down side outweigh the good side? The answer is NO.

@ Barcanista - if you a business man and you want to wire money out of your account to make purchases for imports, the bank would accept your dollar deposit on the condition that your are going to immediately wire it out of your account. The reject your dollars when you just want to dump it in their vaults in the hope that you would make profit when the dollar appreciates against the Naira... Take note.

Check my reply... it is three post below this your original comment.

rigarmortis:
Yet to see an intelligent rebuttal of the facts posited by barcanista, all i see is people dancing around the issue and trying hard to sound intelligent while at it.

barcanista:
Is the value of the Naira really appreciating in the real sense or the CBN and the FG are playing pranks on Nigerians? Why are commodities still high in the market?

Ideal Situation
Ideally, customers operating domiciliary accounts will go to the banks, deposit their dollar and through that account they do whatever transaction that they deem necessary. The Banks inturn will take the dollars(and other foreign currencies) to the CBN.

The Buhari/Emefiele Situation
1. The CBN has stopped receiving dollars from banks, as a result the banks has stopped accepting dollars at the counter because their vaults are full.

2. Because of the restriction at 1(above) the demand for dollar reduces in the BDC. The BDCs seek every means to trade the currency including reducing the cost at the black market. The CBN will go to the press to scream "NAIRA IS APPRECIATING."

3. As a result of 1(above) the banks also refuse to request dollars from the CBN's foreign exchange reserve. The CBN will then come out to scream "RESERVE IS GROWING".

Is that the best way to manage the naira?

Salient Question and Effects:
1. What happens to a businessmen with domiciliary account seeking to deposit dollars and transfer to their partners abroad after buying the dollar from BDC or Bank?

2. The bank's refusal to accept dollar deposit means business transaction on that will be halted. Because no domiciliary account holder will be willing to withdraw from his account when he knows that he won't be able to make further deposit due to the CBN's policy except if his intention is solely for converting the dollar to naira for local transaction.

3. Instead of doing transactions from domiciliary account, businessmen will be left with no choice but to operate domiciliary account in neighbouring countries where they will be making transactions or resort to wiring money via Western Union in neighboring country.

4. As a result of 3(above) the cost of commodities will go UP because businesses will make up for the extra expenses. Also, that will mean reduction in business activities in the banks.

5. Should the above persist it will get to a certain point where there will be scarcity of the dollar in the market. When it get to that point, the dollar rate is astronomically shooooooot up in the market because demand will outweigh supply. At this point, the naira problem will be worse than it was.

Is The Naira Really Appreciating?
Make no mistake, the naira-dollar rate is yet to appreciate in the international market. As at May 29 the naira/$ rate was N199 in the market. The rate as at today Aug 5, 2015 is still N199. You can't appreciate a currency via the backdoor. Even the black market rate cannot be regulated through the back door.

What "Sane" Countries Does:
The CBN Governor Godwin Emefiele made it look like one can't deposit foreign currencies in cash in another country. This is contrary to the facts on ground. No country will shut down foreign currencies transactions in banks. Let me give two instances...

On February 27, 2015, the Central Bank of Egypt instituted a new policy to help the Egyptian pound. As part of the policy, Individuals and businesses are allowed a maximum of $10,000(or equivalent) deposit daily and $50,000(or equivalent) monthly. The measure would stop companies from buying large amounts of dollars from the black market and then depositing them briefly in banks in order to open letters of credit for imports.

In China the maximum daily deposit/withdrawal of foreign currencies is $10,000(or equivalent).

Is it not better to place a transactional limit for foreign currencies than discourage deposit completely(that will solve nothing)?
We don't produce, we import, we have no policy to promote local production nor infrastructures in place toencourage manufacturers, yet we expect the naira to appreciate. That is no done anywhere.


I will be glad to get the views of others.


God Bless Us All

I didn't respond but I read a post from an idiot here that said it's illegal for US banks to honor foreign money. I laughed in dollars at his cluelessness

US banks can and do use foreign money.

No country has tried exchange rate intervention without getting burnt, there are exogenous factors involved. Having said that can you guys check out @barackobama on Twitter, thank me later.

@barcanista if u did elementary economics, u'll knw dat increase in demand will lead 2 an increase in d price esp wer der R no substitutes. In SANER countries, u will exchange dollar 2 deir currency b4 u can spend a dime. It's only in 9ja wer sme pple are paid in dollars & sme second schls & even pri uni collect tuition in USD. Y did USD increase astronomically in d blk mkt? Was it nt partly because of d elections. Politicians wer spendin money in dollars, pple wer exchangin naira 4 dolls because dey taught der wld be crisis in our country, because demand exceed supply, price of usd naturally went up! because pple do d wrg tin regularly doesn't mean it's rite. Ders form A 4 individual transfers amd form M for BTA's. LC(letter of Credits) will help finance purchases of goods & services frm foreign countries. Wat dis means is dat usd will greatly depreciate b4 naira. More biz 4 d banks will increase profit & thus employment opportunities. D latest is dat banks av even stopped trf 4rm dorm acct. Good wrk by CBN

teeowl:
@ Barcanista - if you a business man and you want to wire money out of your account to make purchases for imports, the bank would accept your dollar deposit on the condition that your are going to immediately wire it out of your account. The reject your dollars when you just want to dump it in their vaults in the hope that you would make profit when the dollar appreciates against the Naira... Take note.

Under the current condition, you cannot transfer money out... Go figure.

teeowl:
Check my reply... it is three post below this your original comment.

Aiit my good man.

these is baseless mr man you're ignorant of what is going on.

barcanista:
Is the value of the Naira really appreciating in the real sense or the CBN and the FG are playing pranks on Nigerians? Why are commodities still high in the market?

Ideal Situation
Ideally, customers operating domiciliary accounts will go to the banks, deposit their dollar and through that account they do whatever transaction that they deem necessary. The Banks inturn will take the dollars(and other foreign currencies) to the CBN.

The Buhari/Emefiele Situation
1. The CBN has stopped receiving dollars from banks, as a result the banks has stopped accepting dollars at the counter because their vaults are full.

2. Because of the restriction at 1(above) the demand for dollar reduces in the BDC. The BDCs seek every means to trade the currency including reducing the cost at the black market. The CBN will go to the press to scream "NAIRA IS APPRECIATING."

3. As a result of 1(above) the banks also refuse to request dollars from the CBN's foreign exchange reserve. The CBN will then come out to scream "RESERVE IS GROWING".

Is that the best way to manage the naira?

Salient Question and Effects:
1. What happens to a businessmen with domiciliary account seeking to deposit dollars and transfer to their partners abroad after buying the dollar from BDC or Bank?

2. The bank's refusal to accept dollar deposit means business transaction on that will be halted. Because no domiciliary account holder will be willing to withdraw from his account when he knows that he won't be able to make further deposit due to the CBN's policy except if his intention is solely for converting the dollar to naira for local transaction.

3. Instead of doing transactions from domiciliary account, businessmen will be left with no choice but to operate domiciliary account in neighbouring countries where they will be making transactions or resort to wiring money via Western Union in neighboring country.

4. As a result of 3(above) the cost of commodities will go UP because businesses will make up for the extra expenses. Also, that will mean reduction in business activities in the banks.

5. Should the above persist it will get to a certain point where there will be scarcity of the dollar in the market. When it get to that point, the dollar rate is astronomically shooooooot up in the market because demand will outweigh supply. At this point, the naira problem will be worse than it was.

Is The Naira Really Appreciating?
Make no mistake, the naira-dollar rate is yet to appreciate in the international market. As at May 29 the naira/$ rate was N199 in the market. The rate as at today Aug 5, 2015 is still N199. You can't appreciate a currency via the backdoor. Even the black market rate cannot be regulated through the back door.

What "Sane" Countries Does:
The CBN Governor Godwin Emefiele made it look like one can't deposit foreign currencies in cash in another country. This is contrary to the facts on ground. No country will shut down foreign currencies transactions in banks. Let me give two instances...

On February 27, 2015, the Central Bank of Egypt instituted a new policy to help the Egyptian pound. As part of the policy, Individuals and businesses are allowed a maximum of $10,000(or equivalent) deposit daily and $50,000(or equivalent) monthly. The measure would stop companies from buying large amounts of dollars from the black market and then depositing them briefly in banks in order to open letters of credit for imports.

In China the maximum daily deposit/withdrawal of foreign currencies is $10,000(or equivalent).

Is it not better to place a transactional limit for foreign currencies than discourage deposit completely(that will solve nothing)?
We don't produce, we import, we have no policy to promote local production nor infrastructures in place toencourage manufacturers, yet we expect the naira to appreciate. That is no done anywhere.


I will be glad to get the views of others.


God Bless Us All

barcanista:

Firstly, banks made it very clear that they are not accepting dollar deposit. This position was re-echoed by CBN. Do you beat speculators with this? If you read my OP I did not dispute the fact that speculators hoard the dollar for a gain, my position is that stopping deposits altogether is a big FLOP! I have never heard of a country that beat the speculators like that. I gave instance of Egypt and how they control the blackmarket price. That policy is very sustainable and a positive step...add to the fact that Egypt produces some stuffs unlike Nigeria that is 100% import. What we will exprience in the short run is hike in commodity of goods and on the long run we'll experience dollar scarcity (as explained in my OP). When that time reaches then you will understand that speculators weren't "beaten" but only given a major lifeline.

Banks stopping deposits was as a result of something. Firstly, let me clear something. Before last week, you could deposit USD into your dom account. But you cannot transfer it out of Nigeria. (Cash deposits cannot be transferred out). The only exception to this rule was inflows. (the bankers know what it is). Before last week, as we all know, CBN restricted access to some items and that resulted in scarcity of the FX. Scarcity drives prices up. Then again, the speculators (before this time) were smiling because it is in their interest to see the naira depreciate further and before the CBN will reverse its position (they will do this in public) they would have sold making a huge gain. But the announcement (last week) was spontaneous. In fact, the banks were refusing dollar deposits even before notifying their customers through mails. That was where the speculators lost.

Like I said, stopping deposit is a temporal measure because there will always be foreign currency in circulation. But it must never compete with the local currency - that unfortunately is the position today. These countries, especially Egypt have credible customer base system. We do not have as we can beat the system. The BVN will help with that. I said in my first post (not this one) that the BVN will go a long way in helping the CBN know who actually demand USD. And if one is caught, I tell you, he won't find it funny.

We are not a 100% import country. We do import large quantities of commodities but we are not a 100% import oriented country. Then again, as per scarcity, there is no scarcity of the USD. I tell you this. If you want $100k I can get it for you. There is so much USD in circulation today. What will happen is for these banks to discuss with the CBN to find a way of reducing the USD in their vault and CBN will issue another directive limiting the amount of cash (USD) a bank can hold in its vault.

As explained here we have no mechanism in place to see growth in local production at the same time we are implementing a "laughable policy". See the long run we will understand that there is no short cut to this.

Thanks!

We do have a mechanism. Ordinarily, the fiscal managers should have issued a ban citing negative effect it will have on the national economy. But the monetary managers had to act because we do not have a fiscal manager. And the effect is already affecting our reserves.

Phunmibi:
Buoda barcanista
How market?

Sister Phunmibi
We still de hustle the market

helpee:
@ barcanista, thanks for the analysis. kindly disregard those that have nothing to contribute except shouting wailing wailers. But i disagree with you. naira actually depreciated against the dollar because of excessive speculation. As you know, due to the ban on 41 products importers from accessing forex at the official rate, they had to source it from the parallel market. The excessive demand for forex by these importers from the black market at first created a scarcity that pushed the dollar up temporarily. speculators then cashed on that and started hoarding dollars thinking the dollar will keep rising against the naira especially since the new govt has no concrete plan in place. i was almost caught up too. i was advised to change most of my daily sales to dollars and then deposit in my DOM account in speculation of a further weakening of the naira. therefore, the banks were flooded by speculators with dollar deposits and many of them under the disguise of importation are laundering the money abroad via transfer. so, by refusing to accept the dollars, the CBN is playing a very smart move aagainst speculators. many people are therefore caught with dollars which they cant transfer or even deposit except to convert it to naira. therefore, the economy is flooded with dollars and demand is less than supply so the dollar must come down.
IS IT SUSTAINABLE/
Yes but we will temporarily suffer in sacrifice for a prosperous naira. importers will be temporarily caught unaware. the CBN will only create a bereaucratic bottleneck that will make it difficult for anybody except importers to access forex. BVN is one of the them. money launderers that used to access forex and transfer via DOM account will be cut off by the bottleneck. speculators will not find it attractive to hoard dollars because unless they ggenuinely need the dollars, they wont be able to get value for it since they cant spend it locally, cant transfer and cant even deposit. what do you need a useless dollar for?
it is not easy to open domicilliary account in neigbouring countries like you suggested unless you are a citizen or permanent/legal resident so few will be able to divert import activities to the neigbouring countries. therefore, even without increasing local production of imported stuffs, the naira will still stabilise against the dollar at a favourable position cos the most damage done to the naira usually comes from speculators. once we only access just the dollar we need for importation, school fees and other legal business abroad, we will stop speculating with the naira .
Even if things are temporarily expensive, we youths should take up the challenge and start producing. you can start with toothpick for example cos it is part of the products banned from accessing forex officially. the bottomline is that if it will be sustainable we must support the CBN in this quest. this is the first policy of this govt/CBN that i support.

Can you explain why the naira is gaining against the dollar and losing against other major currencies. Its only a major currency like euro, pound, Switzerland franc that can pull such cos they are sometimes used in across boarder transactions. This is only a cosmetic approach and it won't last long. Our economy is not determined by importers rather by crude which is mostly traded in dollar.

modath:
Just knew Barcanista was gonna wail about this too..

He performs on cue.

Barcanista, its not the 199.5 that is the problem, ( we all know that is a product of your hero & PDP's 16yrs molestation of the nation's commonwealth) it is the speculative marketers, hoarders & round trippers that drove the parallel end to almost 250 that are the problem, but trust you to highlight the negative...

How you get anything done beyond this write ups beg the question " you nor dey tire" ?

Yes na, which includes the new PDP

doncaster:
Can you explain why the naira is gaining against the dollar and lose against other major currencies. Its only a major currency like euro, pound, Switzerland franc that can pull such cos they are sometimes used in across boarder transactions. This is only a cosmetic approach and it won't last long. Our economy is not determined by importers rather by crude which is mostly traded in dollar.

This is not a cosmetic approach but a temporal/short term measure.

It seems a lot of you didn't do Economics in school... If the most used currency for international transaction is dollar, how will you think banks not accepting this will improve the economy and naira value?

Sef lemme pause here, a big business idea just hit me... It's time to look for investors.... This new CBN policy just opened door for me

teeowl:
@ Barcanista - if you a business man and you want to wire money out of your account to make purchases for imports, the bank would accept your dollar deposit on the condition that your are going to immediately wire it out of your account. The reject your dollars when you just want to dump it in their vaults in the hope that you would make profit when the dollar appreciates against the Naira... Take note.

Truth is that cash deposits cannot be wired out.

kaboninc:


Truth is that cash deposits cannot be wired out.

But online inflow can be wired?

Eyop:


But online inflow can be wired?

Yes. That's the "alternative" source CBN was referring to in their circular.

Note that every inflow into the country has a tag or label or ID and it is being monitored.

kaboninc:


This is not a cosmetic approach but a temporal/short term measure.

You say it's a temporary/short-term measure, if this is the case, what are the economic implications of such measures?

Foreign exchange is a strong component of the economy, small and medium enterprises rely on easy and quick foreign exchange to transact business. Please enlighten us the economic impact of this measure? If you want scenarios, I'd be more than glad to give you some.

Thank you!

Stop being pessimistic,its not good for your health

It beats my imagination how barcanista is roaming freely in NL... he should be placed in solitary confinement!!!

When Jonathan was president, oga GEJ do bad thing this guy'll still find a way to praise him....

Cos ur paymaster is not there again everything the new government does is wrong, is a lie, is fraud.
A biased mind you are (i'm tempted to call u a wailerbt no i wont)


I shake my head for you and the kind of house you will govern or are governing.


Have a little(no mata how small) faith in the system... unless, of course, you are namadi kanu in disguise. Takia!

kpolli:
It seems a lot of you didn't do Economics in school... If the most used currency for international transaction is dollar, how will you think banks not accepting this will improve the economy and naira value?

Sef lemme pause here, a big business idea just hit me... It's time to look for investors.... This new CBN policy just opened door for me

Am so interested in your new idea oh. Shoot me a mail nau