@Mauri

I wish I could buy you a round of drinks, succint, well put and accurate .

THANK YOU!

Honestly this is beyond comprehension, the only good thing is effectively eliminates the BDC's who were arbitraging between the real value (black market) and the official , now they will have limited access and they wont be able to arbitrage (too bad, welcome to Nigeria.. ease of business is very hard). Now if you want dollars, deal with the mallams.. However note one thing, they will crack down on the mallams next.

Obviously trying to fight supply of dollars in the market, but thats not whats driving devaluation. Oil price go down, naira goes up. How simple is this for us all to understand, if we keep importing, with less supply this actually makes the devaluation WORSE....

supply and demand, limit supply with same demand, price goes up. Kindergarten economics... what is CBN doing exactly?

Simply put, Because the official price is not real, its subsidized. Official rate has a part govt pays for every dollar. Street value is the international value without CBN subsidy.

HyDef:
Why is there such a disparity between official rates and black market rates?

I know nothing about economics, can someone explain? If the banks are cheaper, why doesn't everyone just change cash there?

wellmax:
Hmmm. PMB better sack this Jonathan stooge.

Y and u think Buhari is not in support of the policy?

proficienc:
Sometimes when I read people's comment on here, all I can say is "God save us all".
It seems all of us comment just to follow a trend. This is actually a good policy and a step in the right direction cos it's only in third world countries that anyone would be carrying/exchanging huge amount of money and no one is asking questions. It's highly imperative we move to level where people ask questions, important questions like for instance, a civil servant whose salary is barely 100k buying luxurious houses, cars etc where him see money do am? Did he make photocopy of his 100k abi how na?
Policies like this would make tracking money easy alongside the BVN idea.
On the Economic implications of this policy, basically, we're trying to choke the demand of Dollar vis-a-vis other foreign currencies. Why should we do this? Elementary economics dictates that the less the supply of a commodity, the higher the price people are willing to pay to acquire such commodity. This means curtailing the supply of Dollar only means an appreciation in the value of Naira. But this is just on paper, in reality we need to follow this up with expansionary policies eg policies that encourages export etcetera
Not many would read but the few that can relate would understand.
My humble submission

are u just knowing that nigerians care the most educated illiterate in the world? Their comment is infleunce by whether this policy makes buhari look good or not.

Suyamasta, what makes you think a floating exchange rate would be best for an import dependent country?

That will make importation of non-essential goods expensive. At some point the equilibrium will tilt when importation gets too expensive and less profitable. People will seek alternative and that will reduce the pressure on the supply of Naira against USD, GBP, EUR.

xandy84:
You are wrong. Every countries in the world has a street trading with little or no regulation from the government. What the CBN should do is make Dollars accessible to genuine buyers and discourage people from patronizing the black market. Fixing a limit on how much i dollars i can spend daily is an encouragement for people to patronize black market.

You just call it black market. Black market is an illegal market no matter where it is practiced. Illegality has been so ingrained in Nigerian lifestyle that people easily forget the difference between legality and illegality. An Ibo adage says when an abomination is allowed to stay for a year it becomes a culture.

This Emefiele is as dull as they come. Until GEJ and NOI invited him to come help them launder Nigeria's money for the PDP operations, he was good at nothing but keeping politicians' atolen at Zenith bank.

@Hakagure

@Mauri

I wish I could buy you a round of drinks, succint, well put and accurate .

THANK YOU!

Thanks bro. I am humbled.

You go still buy me drink o. LOL

Hakagure:
Simply put, Because the official price is not real, its subsidized. Official rate has a part govt pays for every dollar. Street value is the international value without CBN subsidy.

You are not wrong, but that is not the entire story.
The Demand for Foreign exchange is very high and the CBN can not sustain/meet up with this high demand for long, hence the rationing. The Nigerian economy depends highly on imported goods and services, and this is the reason people need foreign exchange so badly. Things would not have been this bad if Nigeria is still earning as much Forex from the sale of crude oil as it used to before as this accounts for about 90% of the Forex we get as a country . The street price of Forex is usually determined by the supply(availability) and demand(how badly people want the dollar), the Bureau De change guys hurdle Forex in times like this (when it is already scarce) thereby forcing people who must carry out foreign transactions to pay more for it and this puts more downward pressure on the Naira, because you have to part with more unit of Naira for a unit of Forex.

MAURI:


That will make importation of non-essential goods expensive. At some point the equilibrium will tilt when importation gets too expensive and less profitable. People will seek alternative and that will reduce the pressure on the supply of Naira against USD, GBP, EUR.

What about essential goods? What alternatives will people seek? what is the alternative to electricity generating sets? what is the alternative to household appliances? what will the country consume? explain please.

CBN is out of ideas on how to control the falling naira.

We dont have a functional CBN and we dont have a functional Economic Minister and most importantly, we dont have a Minister of Petroleum except for a junketing aged old ancestor that knows nothing about crude oil than allocating marginal fields to northerners.

I lost hope in Nigeria when I realized that majority of us are illiterates. We vote for illiterates and we dance to illiterate songs and we kill for inexistent virgins without reasoning if spirit have dicks to fucck virgins.

eaglechild:
Hyperregulating a fledgling economy.

This wasn't exactly how Dubai, Singapore and Korea emerged.

We need NOI back before this dullard kills off what is left of the ruins.

While Emefiele sounds ill-equipped for the task, I doubt we want NOI to return. We are yet to completely unravel her role in the turning of our CBN into an ATM for insurance and spiritual matters.

adioolayi:
Great economists of Nairaland ..I don't want to judge this directive as a novice...Please explain the Fundamental implications of this. What school of economics does this suits Is there any where in the world this has been put to test what was the outcome After these answers...We will be able to judge holistically

It is normal. I really don't understand why they are just thinking of it now. In normal societies you will never find people hawking currencies on the streets. At least legally.

https://www.nairaland.com/2791704/recession-horizon#40854608

Situation may get worse, with this level of currency controls. There will be no FDI coming in, no FDI and no access to credit for most companies. Layoffs , layoffs, layoffs... people will suffer and we are still talking, please lets understand this is severe.

Is any one out there thinking this through, stop playing politics and let the naira float, lets be fully liquid.

What about essential goods?

That is why we have regulations / import restrictions on some goods and not all goods.

shala01:

are u just knowing that nigerians care the most educated illiterate in the world? Their comment is infleunce by whether this policy makes buhari look good or not.

It was funny at first... now it's really old. we should appreciate the good work the government is trying to do.
The government is actually put things that should be in place by now into other and people are screaming. Brings to mind the very case of Lagos where people were crying and condemning Fashola. Today, he's their hero. Nigerians and babies have something in common, whining!

MAURI:


That is why we have regulations / import restrictions on some goods and not all goods.

Is there enough Forex to sustain essential goods in the economy?

The much anticipated change, sorry for Nigeria. Fools are in power

Hakagure:
https://www.nairaland.com/2791704/recession-horizon#40854608

Situation may get worse, with this level of currency controls. There will be no FDI coming in, no FDI and no access to credit for most companies. Layoffs , layoffs, layoffs... people will suffer and we are still talking, please lets understand this is severe.

Is any one out there thinking this through, stop playing politics and let the naira float, lets be fully liquid.

Bro, I assume you are not an Economist, it is not sustainable to let the Naira float, it would make the Naira valueless killing the economy.

I dont think we can afford to fix the dollar. We dont have forex to fight at keeping the naira at any level. Demand and supply will determine the price of essential goods, why should we treat them any difference, the country will consume what it can afford! The issue is quite severe and the more we delay the worse the crash will be and we will lose the confidence of the capital markets (this has already happened!)

1freshdude:


What about essential goods? What alternatives will people seek? what is the alternative to electricity generating sets? what is the alternative to household appliances? what will the country consume? explain please.

Those be fighting words.

Listen to what I said, why are you challenging my "pali" .. Its not sustainable to try and fix the value of the naira, thats why you are seeing us doing all these capital controls. The limited industrial base will be destroyed if we cannot access capital markets, mining, energy, banking, finance, the bond market, consumables... That will kill the economy.

Fiat money decreasing in value will not!

1freshdude:


Bro, I assume you are not an Economist, it is not sustainable to let the Naira float, it would make the Naira valueless killing the economy.

adioolayi:
Great economists of Nairaland ..I don't want to judge this directive as a novice...Please explain the Fundamental implications of this. What school of economics does this suits Is there any where in the world this has been put to test what was the outcome After these answers...We will be able to judge holistically

As an Economists, I'll suggest d total cancellation of dollar sales or rather dutch auction. Its only in Nigeria that dey trade dollars in a Naira dominated economy. This further creates pressure on naira and hence dis present situation but if cancelled, anybody in need of dollars will work into banks n BDC to get their forex at d official exchange rate. I hope this will clarify abit for u

ishiamu:


Everything about buhari is confused

high class mumu that's what's u are. Oponu

[s]

lastpage:


First, l agree that there is no need to "Hawk" forex at street corners but l do understand that those Mallams are just like "marketers" who are staffers of a particular registered BDC Company.

What needs to be done is to ask that the actual transactions take place in a registered office. That is, when the "marketer" gets a customer off the streets, he should lead that customer to their registered office and the transaction takes place in such office. Finito!

Again, asking BDC's to close all branches is like asking all Banks to close down all their branches and operate ONLY from their Head office!
What can be more stewpid than that?

Is Emefiele telling us that if a BDC has its HQ at Abuja, l need to travel to Abuja, to exchange a paltry $300, for example?
Why cant l change it at their branch office nearest to me? What is that directive supposed to achieve?

You dont cut-off your nose, simply to spite your face! It is senseless and counter-productive!!

What we need is more "intelligence-led" monitoring, not some rash of archaic policies that lead now-where.



Lastpage!

[/s]

What about essential goods? What alternatives will people seek? what is the alternative to electricity generating sets? what is the alternative to household appliances? what will the country consume? explain please.

Let's have another thread for this.

Look, we have to start thinking in solutions and not in problem. Are you aware of hom much Nigerians spend on the importation of generators and diesel to power them annually?

I am sure you must have heard / read about the multi billion oil subsidy fraud? Why are finished oil products being subsidized by the Nigerian government? I have explained this in another thread. I am willing to do it again, so you have a complete picture.

Why isn't the government chanelling all these monies into making sure we have operational refineries in Nigeria? It will cost less that all the subsidies put together. For your info.

I will demonstrate the link between lack of operational refineries and it's impact on the Naira / forex (current thread) All the crude we take back and forth abroad to refine and bring back finish products, that whole process is paid for in USD, the scarce forex we otherwise could put to better use. (Transportation, refining, insurance etc. All paid for in hard USD!)

Look bro, our challenges in Nigeria are not as complex as they are made to look, if only the power brokers and the people holding Nigeria to ransom decides to let go of the choke.

adioolayi:
Great economists of Nairaland ..I don't want to judge this directive as a novice...Please explain the Fundamental implications of this. What school of economics does this suits Is there any where in the world this has been put to test what was the outcome After these answers...We will be able to judge holistically

DRZ NO NID KNWIN IF IT HS WRK ON ANODA ECONOMY. CUZ ALL MODELS DT AV WRKD ELSEWER AV NEVA WORKD HERE. SO LETZ TRY IT N C.

1freshdude:


You are not wrong, but that is not the entire story.
The Demand for Foreign exchange is very high and the CBN can not sustain/meet up with this high demand for long, hence the rationing. The Nigerian economy depends highly on imported goods and services, and this is the reason people need foreign exchange so badly. Things would not have been this bad if Nigeria is still earning as much Forex from the sale of crude oil as it used to before as this accounts for about 90% of the Forex we get as a country . The street price of Forex is usually determined by the supply(availability) and demand(how badly people want the dollar), the Bureau De change guys hurdle Forex in times like this (when it is already scarce) thereby forcing people who must carry out foreign transactions to pay more for it and this puts more downward pressure on the Naira, because you have to part with more unit of Naira for a unit of Forex.

good submission, but I believe d total cancellation of dutch auction will ease d pressure n all transactions will have to go official

Harwoyeez:
As an Economists, I'll suggest d total cancellation of dollar sales or rather dutch auction. Its only in Nigeria that dey trade dollars in a Naira dominated economy. This further creates pressure on naira and hence dis present situation but if cancelled, anybody in need of dollars will work into banks n BDC to get their forex at d official exchange rate. I hope this will clarify abit for u

Funny economist.

If you "cancel" dollar sales, how will the banks and BDCs get funds to sell to anyone?

You are aware that you cannot just "get dollar at the official rate".. Everything is capped. so if I want to study at a 100K a year university(heck 20 a year sef), CBN wont give me all the money.

If I want to buy a component for my combine harvester, it may not be on the approved list .. hence .. down time. Energy companies will try and use futures and puts and arbitrages and they will lose money on the exchange rate. Who wrote approved list? If I need beets is it on the approved list!

And fyi.. its not only in Nigeria o, every country in the world that I have been to has a BDC, actually you can trade forex FREELY if you want in the US and in Western Europe. In any currency!

Harwoyeez:
As an Economists, I'll suggest d total cancellation of dollar sales or rather dutch auction. Its only in Nigeria that dey trade dollars in a Naira dominated economy. This further creates pressure on naira and hence dis present situation but if cancelled, anybody in need of dollars will work into banks n BDC to get their forex at d official exchange rate. I hope this will clarify abit for u

More jobs to be lost.

Bros.. do you blog?

MAURI:


Let's have another thread for this.

Look, we have to start thinking in solutions and not in problem. Are you aware of hom much Nigerians spend on the importation of generators and diesel to power them annually?

I am sure you must have heard / read about the multi billion oil subsidy fraud? Why are finished oil products being subsidized by the Nigerian government? I have explained this in another thread. I am willing to do it again, so you have a complete picture.

Why isn't the government chanelling all these monies into making sure we have operational refineries in Nigeria? It will cost less that all the subsidies put together. For your info.

I will demonstrate the link between lack of operational refineries and it's impact on the Naira / forex (current thread) All the crude we take back and forth abroad to refine and bring back finish products, that whole process is paid for in USD, the scarce forex we otherwise could put to better use. (Transportation, refining, insurance etc. All paid for in hard USD!)

Look bro, our challenges in Nigeria are not as complex as they are made to look, if only the power brokers and the people holding Nigeria to ransom decides to let go of the choke.