omonnakoda:
How is it rubbish to reproduce a "factual" report verbatim. did he add any opinion. You are just too rude. The fact that you are online is not a licence for gratuitous unruliness.

GworoChewinMaga:


The naira has been partially devalued by the same CBN and the only other policy rolled out by the CBN is to limit access to it. The exact thing the Egyptians are doing which has led to huge disparity between the official rates and the parallel market.

Isn't this the same situation in Nigeria?


Was the naira trading at 220 as at may 29, 2015?

GworoChewinMaga:


Devaluation means subjecting the naira to full market forces and not by the CBN.

Or was the naira officially trading at 220 as at may 29 2015?

989900:

1. Egypt devalued their currency some few weeks ago by 13% (I guess you didn't read that part 'cause I didn't embolden it . . . *facepalm*), hoping that would bring the rates from both markets closer and sorta normalize things . . . and we had some folks like you here cheering them on that Nigeria should do the same.

2. Egypt is back in the same poo some weeks after devaluation -- which is exactly what would have happened to Nigeria, if the call to devalue the Naira as an attempt to reduce importation and bring the BM rates closer to the CBN rates.

3. Hope you and slow folks like you learnt a thing or two, even though y'all will never be humble enough to admit your fallacy. [/i]

chinchum:
Subjecting the naira to market forces is even a worse attempt, the forces will be against the naira for now, we are a consuming nation that imports too much, and only exports raw materials. When we activate our industrial base massively, we can throw it open.

GworoChewinMaga:






Mumu,the naira has lost well over 30% value by the same CBN policy since may 29. Was the naira trading at 220 officially a year ago?




Nigeria is neck deep in the same sh1t Creek with the official parallel market gap.



Difference between a fool and a stup1d person is their level of confidence and arrogance. A fool is a simpleton who accepts their ignorance while a stup1d person wallows with pride in their ignorance.

chinchum:
Subjecting the naira to market forces is even a worse attempt, the forces will be against the naira for now, we are a consuming nation that imports too much, and only exports raw materials. When we activate our industrial base massively, we can throw it open.

989900:


ROFLMAO, and he just doesn't get it.

GworoChewinMaga:


Must you continue to import?

Devaluation will make our market look inwards and provide much needed foriegn investments.

This is how China, Korea and Japan developed.

We must begin to look inwards.

Even if we have 2 trillion dollars in reserves it will dry up sooner or later since we import everything including the kitchen sink.

omonnakoda:
That is not the point ,the OP did not write the article he only reproduced it so why say he is writing rubbish. Learn some manners and how to behave like a human being

GworoChewinMaga:


Must you continue to import?

Devaluation will make our market look inwards and provide much needed foriegn investments.

This is how China, Korea and Japan developed.

We must begin to look inwards.

Even if we have 2 trillion dollars in reserves it will dry up sooner or later since we import everything including the kitchen sink.

GworoChewinMaga:


Must you continue to import?

Devaluation will make our market look inwards and provide much needed foriegn investments.

This is how China, Korea and Japan developed.

We must begin to look inwards.

Even if we have 2 trillion dollars in reserves it will dry up sooner or later since we import everything including the kitchen sink.

989900:


One question Mr. Gworo, or any of his (quick one): When you say imports what do you mean? And what percentage of our Forex demands go into that?

Quick one (3 minutes . . . your time starts now)

tsdarkside:


thats not going to happen...to understand why i said that you must understand the overhaul mentality of the black-race in general...

China, Korea and Japan model will not work for us...

never forget,you are black and the world never played fair with you...it will not work!!!!!....

4Play:


The sad thing is their obliviousness to their profound economic illiteracy. He puts up an article about the ill-fated move by the Egyptian government to fix exchange rates, instead of leaving it to market supply and demand to determine as economists recommend, and proclaims that this illustrates that the Nigerian government is vindicated!

To the contrary, the Egyptians are doing what the Nigerians are doing and are predictably failing. The fact that they have chosen to devalue a bit doesn't refute the fundamental diagnosis - governments cannot simply fix echange rates unless they have sufficient forex reserves to back it up. Nigeria does not have the reserves to fix the Naira at a particular price level so insisting on doing so will cause unnecessary hardship and creates opportunities for corruption via round-tripping. Why is this so difficult for Nigerians to understand?

omonnakoda:
That is not the point ,the OP did not write the article he only reproduced it so why say he is writing rubbish. Learn some manners and how to behave like a human being

4Play:


You diagnose the problem as importing too much but insist that we should keep imports cheaper (not allowing the Naira fall makes imports cheaper). Therefore, don't you recognise fundamental inconsistence in your analysis?

GworoChewinMaga:


Maybe in your niggeria utopia called nijeriya.

This is why I want Nigeria to split so all you lazy free loaders can continue your nigga life under your niggeria.

4Play:


The conclusions he draws from the article - that it vindicates Nigeria's currency policy - are not borne out by the contents of the article. The article shows Egypt's ill-fated quest to solve its forex problems by fixing an exchange rate by fiat and cracking down on the black market. It has woefully failed and, thus, Egypt serves as a good example of the perils of a fixed exchange regime.

By narrowly focusing on devaluation, the OP misses the forest for the trees. The CBN's policy misstep is not a failure to devalue but a failure to allow market forces dictate the Naira's value given the CBN's lack of ammunition (i.e., forex reserves). Simply lowering the exchange rate's value by fiat will actually feed a speculation frenzy as the market will think that if you have done it once, you are going to do it again. Hence, it's better to leave prices to be determined by market supply and demand and not by government diktats.

GworoChewinMaga:


Must you continue to import?

Devaluation will make our market look inwards and provide much needed foriegn investments.

This is how China, Korea and Japan developed.

We must begin to look inwards.

Even if we have 2 trillion dollars in reserves it will dry up sooner or later since we import everything including the kitchen sink.

chinchum:
Every country imports, but there must be an export base of finished goods , apart from raw materials.

In my opinion, throwing the naira to market forces will throw the Naira to 500 /usd in a twinkle of an eye.

GworoChewinMaga:


We must as a matter of urgency balance our deficit trade balance.

We export only crude and raw materials and in return basically everything else.

For us to begin to be a net exporter we must reduce our net imports.

The truth is that Nigerians do not deserve the life style they are living.

You basically produce nothing and depend on oil revenues shared through your corrupt governors to remain in existence.

The Nigerian policy is tantamount to a yeast culture where you consume and reproduce without recourse to the limited resources at your disposal and just like all yeast cultures when the food source is completely consumed, the culture dies out.

Nigerians should begin to wean themselves off the over dependence on free oyel money and this is why I am a staunch advocate in promoting cocoa and grounding plantations in the sw and North alongside any other cash crops you can scratch off your lands.

It's time to get back to work.

jollymizzle:

Yes we need to look inwards and start manufacturing what we need most,but then how soon can we start manufacturing phones,TVs,ACs,cars,(of quality)and other electronics? These things form the bulk of our imports and we will continue importing such things for a considerable number of years,we need a forex earner as oil has been the only one,we need to start exporting agric resources,solid minerals,to bring in some forex,we don't have to deregulate to achieve these things.and mind these so called investors who want the dollar to be so astronomical to the naira before they bring it in to invest only want our resources for profit not to help us.so I say let's get the Chinese on our side.

DropShot:

What then can the govt do in the situation it finds itself given the fact that it MUST provide forex for many essential imports?

What exactly is the way you propose since the govt doesn't have enough dollars to make available to those genuinely needing it; and the fact that it cannot afford the exchange rate to be left completely in the hands of parallel market traders?

I await your clear suggestion and not ......

The answer goes back to the initial catalyst for the Naira's fall, reduction in forex inflow due to the fall in oil prices. To remedy this, you need to find alternative sources of forex inflow such as foreign investment. Nigeria had $21bn of FDI investment in 2014 alone. However, foreign investment will reduce significantly if the official exchange rate, which is foreign investors sole recourse, does not reflect the market value. If you wanted to build a factory in Nigeria at estimated value of 200bn Naira, why invest $1bn at the official rate when the real value should be circa $600m at market rates? Therefore, the fixed exchange rate perpetuates a rapid and self-reinforcing fall in Naira as forex inflow is discouraged. This is all what I predicted in previous posts months ago and is actually borne out of the experience of many countries, including Nigeria, who try to maintain a fixed exchange regime without adequate forex reserves.

From the point of view Nigerian exporters, why repatriate forex income to Nigeria when your forex purchasing power will not reflect in the Nigerian market the real purchasing power of your forex? Hence, a fixed exchange rate regime also reduces export revenue as seen in the dramatic collapse in non-oil export revenue.

GworoChewinMaga:


You import PMS because the subsidy policy and lack of clear policy frame work in the down stream oil sector has made investments into local refinering non attractive.

Today fuel imports consume well over 40% of forex demands.

[s]I will leave just this argument since I am not responsible for your education [/s]

Zombie

GworoChewinMaga:


We must as a matter of urgency balance our deficit trade balance.

We export only crude and raw materials and in return basically everything else.

For us to begin to be a net exporter we must reduce our net imports.

The truth is that Nigerians do not deserve the life style they are living.

You basically produce nothing and depend on oil revenues shared through your corrupt governors to remain in existence.

The Nigerian policy is tantamount to a yeast culture where you consume and reproduce without recourse to the limited resources at your disposal and just like all yeast cultures when the food source is completely consumed, the culture dies out.

Nigerians should begin to wean themselves off the over dependence on free oyel money and this is why I am a staunch advocate in promoting cocoa and grounding plantations in the sw and North alongside any other cash crops you can scratch off your lands.

It's time to get back to work.

chinchum:
Every country imports, but there must be an export base of finished goods , apart from raw materials.

In my opinion, throwing the naira to market forces will throw the Naira to 500 /usd in a twinkle of an eye.

4Play:


Your premises are flawed and miss the substance of my posts. The government does not have to provide the forex as the market can adequately provide forex. The key difference is that the market will provide it at a price higher than N199 to the dollar which will reflect the true exchange rate value.

You may say that this may cause hardship for Nigerians but Nigerians are already experiencing hardship due to the hamfisted attempt to provide dollars at a fraction of its true value. Scarcity is the inevitable consequence of price fixing below the market value - hence fuel scarcity and dollar scarcity. Indeed, if you go back to the first Buhari government - we had scarcity of many goods as the government sought to fix the price of things like sugar.

One thing I have also noted in my previous posts is that the fixed exchange regime accelerates the Naira's depreciation as I noted here:#