Elosky20:
The CBN has only two options now:
1. Devalue the naira and support the naira from the foreign reserve, but the foreign reserve is low and can only last for 3 months.
2. Restrict importation of certain products, to save the foreign reserve for inevitable imports, which cannot be sourced in nigeria.
.
The second option is clearly the best in the long run, while the first can only work for a short period because the oil price is not rising anytime soon and might go down to even $20. We have to stop this our importation madness and start using what we can produce in nigeria. For how long will Nigeria continue to dodge this bullet, when we can disarm the assasin with a little effort and sacrifice.
"Naira must fall, so nigeria can rise again"
i stand with buhari

kay29000:



There are more civilized ways of criticizing a Government than calling your president 'Booohari.' Don't you think?

ndcide:
They bring in dollars and earn naira. Are they going to spend the naira? Does not add up.

Mboi:

3. PMB and his entourage should put a stop to all these unimportant foreign trips to also increase our forex reserve. It's estimated that each presidential foreing trip cost about $1m.

mrvitalis:
I won't devalue the naira if I was the president too
Let's endure... This is just a phase

ndcide:
They bring in dollars and earn naira. Are they going to spend the naira? Does not add up.

linearity:


The key is the line in the original article...

"....Foreigners are taking advantage of the naira situation. We have 18 countries within the continent where the naira is accepted. The speculators are coming in because of the huge gap between official and parallel market rates....Gwadabe said exporters, mainly from Dubai, have agents in Nigeria, who accept naira from importers at agreed dollar rates.

The importers travel with certified invoice to bring in the goods, a practice, he said, reduced pressure on the naira."

They either take the Naira back to their country to spend it, or they can use it to pay dubai resident exporters on behalf of their clients in order to import goods from dubai.

uduokirika1:
.

repogirl:
okay, financial economics 101....

I guess you are aware that CBN provides Nigerian importers with dollars to pay their foreign suppliers. For example, let's take the petrol importers.

These petrol importers pay CBN in naira and collect dollars at the official rate of N197. Remember CBN is paying them from our foreign reserves, so they have to return the money to the reserves.

Now,the issue is CBN cannot exchange this naira at their rate of 197 anywhere and they are forced to exchange at the market rates which is presently hovering around N400 at the moment. This means CBN will be exchanging the Naira back to dollars at a higher rate than they gave the importers, thereby losing a lot of money in the process.

To make it clearer

CBN gives Importer , $2 billion at N197 per dollar, means the importer pays CBN 394 billion naira.

But when CBN wants to exchange the Naira received from importer to dollars, they exchange at lets say N375 per dollar, which becomes, 394 billion/ 375 = $1.05 billion.

This means CBN has made a loss of N950 million.

This is the reason why they have stopped exchanging for some imports, medicals and students abroad, they are losing money seriously.

If the Naira had been devalued since, it might not have gotten as bad as it presently is, because now the market is being fueled by desperation and panick.

Hope I have hereby been able to convince you in the need for a devaluation of currency. It's simple, we are losing money.

Ibeme:


Repogirl, what do you need to exchange at N197?

An invoice from an exporter etc?

I have millions of Naira I need to exchange at N197. Can you help point me in the right direction?

yaki84:







u r not right in this ur economics 101.
its vague n fallacious.
now lets take for instance cbn releses 10billion dolls to banks at 197, the banks hv paid for this 10billion dollars released by cbn, d money they hv now is in naira so automatically d cbn have minus10billion dollars and 1.97trillion naira.
what cbn need do is source for dollars with d 1.97trillion naira they have.

repogirl:
okay, financial economics 101....

I guess you are aware that CBN provides Nigerian importers with dollars to pay their foreign suppliers. For example, let's take the petrol importers.

These petrol importers pay CBN in naira and collect dollars at the official rate of N197. Remember CBN is paying them from our foreign reserves, so they have to return the money to the reserves.

Now,the issue is CBN cannot exchange this naira at their rate of 197 anywhere and they are forced to exchange at the market rates which is presently hovering around N400 at the moment. This means CBN will be exchanging the Naira back to dollars at a higher rate than they gave the importers, thereby losing a lot of money in the process.

To make it clearer

CBN gives Importer , $2 billion at N197 per dollar, means the importer pays CBN 394 billion naira.

But when CBN wants to exchange the Naira received from importer to dollars, they exchange at lets say N375 per dollar, which becomes, 394 billion/ 375 = $1.05 billion.

This means CBN has made a loss of N950 million.

This is the reason why they have stopped exchanging for some imports, medicals and students abroad, they are losing money seriously.

If the Naira had been devalued since, it might not have gotten as bad as it presently is, because now the market is being fueled by desperation and panick.

Hope I have hereby been able to convince you in the need for a devaluation of currency. It's simple, we are losing money.

erico2k2:

Guy relax, did you lot not call GEJ Clueless? infact PMB is a COW, oya call police.

KA24DETT:



, its not true. CBN does not buy dollar from Black market. CBN gets their dollar from selling crude oil which is currently very low now. It pays Oil importers with the dollar it receives. CBN has no business sourcing dollar from black market.

repogirl:
source for dollars from who? Who will take the Naira from them and give them dollars?

If it were so easy to source for dollars, dollars wouldn't be selling for 400 naira.

Please enlighten me on how CBN sources for dollars, I would really like to know.

uncle005:
this is a typical IPOB member

repogirl:
fine, so what happens to the Naira they receive from the importers.

repogirl:
fine, so what happens to the Naira they receive from the importers.

ndcide:
They bring in dollars and earn naira. Are they going to spend the naira? Does not add up.

repogirl:
see, don't give yourself migraine.

CBN gets forex from our sales of crude mainly, but if you have noticed, there's no profit coming from that angle anymore. Crude prices have dropped drastically.

Meanwhile CBN still has obligations to supply forex to importers. They have to take from the reserves which isn't accruing much these days.... And when it's time to return the money to the reserves, they return less....except that money never goes back to the reserves which is even worse.

makenzie:
with 3 degrees at different levels as well as hands on experience in Economics, Finance and financial economics at home and abroad, be rest assured that no issue on migraine cos i am well grounded on this information. i am only interested in seeing if any one will come up with a genius and sustainable argument on the subject matter with respect to Nigerian economy. i am not convinced.

Elosky20:
The CBN has only two options now:
1. Devalue the naira and support the naira from the foreign reserve, but the foreign reserve is low and can only last for 3 months.
2. Restrict importation of certain products, to save the foreign reserve for inevitable imports, which cannot be sourced in nigeria.
.
The second option is clearly the best in the long run, while the first can only work for a short period because the oil price is not rising anytime soon and might go down to even $20. We have to stop this our importation madness and start using what we can produce in nigeria. For how long will Nigeria continue to dodge this bullet, when we can disarm the assasin with a little effort and sacrifice.
"Naira must fall, so nigeria can rise again"
i stand with buhari

Can't we remove this forex restrictions and make import duty so exorbitant that it will discourage importers..

Meanwhile, to improve local production we need to provide certain things like steady power supply and security which is not at its best currently..
My opinion thou, I studied computer not economics..

Empredboy:
oga is that what you know about economics?
If naira depreciates do you think prices of goods and services will remain the same? What happens to salary and pension earners whose income are fixed? How will they cope with the inflated prices?
What about employment? I beg go and know your economics very well before you call for a debate

ndcide:
They bring in dollars and earn naira. Are they going to spend the naira? Does not add up.

sam90s:
Everybody wan go heaven but nobody wan die!
It's a phase people, let's grow some balls and endure, first time in decades we have a patriotic leader with determination to go the extra mile but we'll rather harrass his team than support him, we just keep playing into the hands of leaches who built their empire and future on a unjust system designed to favour just a few.
I get it, importation is tougher than it used to be, but ESSENTIAL items were favoured, those considered non-essential were advices to seek parallel market to secure dollar to pay for their import (they were not banned outrightly), sounds fair to me, a a nation like China will consider a van more suitable.
The main issue now is the parallel market for foreign currency is unstable and almost twice the price of the official rate, which mean imported items will be too costly for consumers, guess what? Consumers should buy Innocen motor and other made in Nigeria products, if for any reasons, like me, they favour Puma and Nike, then they should pay the price, I have a right to enjoy a lifestyle of my choice, however, the future and progress of this nation is far more important.
Luxury consumer goods are affected, foreign student school fees are not, this speak volumes.
Let's focus out criticism of this administration on stuffs like the handling of the budget, which was mishandled, let's support a policy that will benefit out future.

urchmanx:

You just said my mind. It's a simple clear cut case that have proven to work. Example is India. Make import so Expensive like 500% of the import value. That will force local production and discourage import. All this other uncentity will be removed. Nigeria is losing a lot from just speculation. I wonder who is running this govt.

repogirl:
okay, financial economics 101....

I guess you are aware that CBN provides Nigerian importers with dollars to pay their foreign suppliers. For example, let's take the petrol importers.

These petrol importers pay CBN in naira and collect dollars at the official rate of N197. Remember CBN is paying them from our foreign reserves, so they have to return the money to the reserves.

Now,the issue is CBN cannot exchange this naira at their rate of 197 anywhere and they are forced to exchange at the market rates which is presently hovering around N400 at the moment. This means CBN will be exchanging the Naira back to dollars at a higher rate than they gave the importers, thereby losing a lot of money in the process.

To make it clearer

CBN gives Importer , $2 billion at N197 per dollar, means the importer pays CBN 394 billion naira.

But when CBN wants to exchange the Naira received from importer to dollars, they exchange at lets say N375 per dollar, which becomes, 394 billion/ 375 = $1.05 billion.

This means CBN has made a loss of N950 million.

This is the reason why they have stopped exchanging for some imports, medicals and students abroad, they are losing money seriously.

If the Naira had been devalued since, it might not have gotten as bad as it presently is, because now the market is being fueled by desperation and panick.

Hope I have hereby been able to convince you in the need for a devaluation of currency. It's simple, we are losing money.

repogirl:
lol, but he deserves being booed, as he is a charlatan.