InvertedHammer:

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It went up 100%. Wait till it goes up to 500%. Once devalued, the naira will gain a few points and the nose dive starts. The problem some of you have is that you never consider long term effects. You tend to be enamoured with quick fixes that are short term solutions. Where will naira be five years, ten years, twenty years after devaluation? That's how serious nations make projections and not three months fix.

Egypt with some semblance of decorum tried it and failed. So did many other nations. Nigeria, with high reliance on import will be a basket case. The simple fact is that Nigeria has no bargaining chips. If oil ever rolls down to 20s and stay there for a while, Nigeria will go belly up. The hidden truth is that Nigeria has been having problems for years finding buyers for her oil. To move away from dependence on oil revenue takes years to implement. Nigeria has no infrastructures to support any industry with potentials. She can't even guarantee 24hrs of power supply in this 21st century.
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Only on social media will this happen. How old are you? I was there when naira began its fall from parity with dollar. In my childhood I spent a half KOBO. I will try to put up the picture of the 50kobo note I kept since 1991. That's what I used to spend to buy evening papers in 1989/90. I monitored the papers when dollar was 7 naira. My first salary was 178 naira a month. I lived a much better life when naira was 140 to a dollar. You must come on the internet to argue your case but also be open to learn. That's sadly what people in Nigeria NEVER DO. Everybody is an expert online, even the dullest student will chastise his teacher if they met online.
Nigeria has been living an unbelievable lie. We do not deserve to have anything to live on right now. In previous times we did manufacture a huge number of our daily needs right here; our greed for so many things was much less, and we exported a good number of farm produce too. Now if we do NOTHING AT ALL and think we can continue living on the basis of currency manipulation, that's just a sick joke and the joke is on the people who say so - like you because, go to the real world and everything is transacted on the real value of dollar/pound/euro, not the one your govt officials pluck from the sky. The quality of life of a people is not about how much their currency exchanges in the international market. Do you know Ghana? Ghana changed the value of their currency to 100 times it's previous value. Have the Ghanaians become 100 times better off? This is all a joke. Get to work, Nigeria. That's the only way to a better life

blackprowler:


Only on social media will this happen. How old are you? I was there when naira began its fall from parity with dollar. In my childhood I spent a half KOBO. I will try to put up the picture of the 50kobo note I kept since 1991. That's what I used to spend to buy evening papers in 1989/90. I monitored the papers when dollar was 7 naira. My first salary was 178 naira a month. I lived a much better life when naira was 140 to a dollar. You must come on the internet to argue your case but also be open to learn. That's sadly what people in Nigeria NEVER DO. Everybody is an expert online, even the dullest student will chastise his teacher if they met online.
Nigeria has been living an unbelievable lie. We do not deserve to have anything to live on right now. In previous times we did manufacture a huge number of our daily needs right here; our greed for so many things was much less, and we exported a good number of farm produce too. Now if we do NOTHING AT ALL and think we can continue living on the basis of currency manipulation, that's just a sick joke and the joke is on the people who say so - like you because, go to the real world and everything is transacted on the real value of dollar/pound/euro, not the one your govt officials pluck from the sky. The quality of life of a people is not about how much their currency exchanges in the international market. Do you know Ghana? Ghana changed the value of their currency to 100 times it's previous value. Have the Ghanaians become 100 times better off? This is all a joke. Get to work, Nigeria. That's the only way to a better life

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Yes. Welcome to the 21st century my friend. The only thing that is constant is change. We live in a fast paced world and most Nigerians rely on imports unlike the era you reminiscing with nostalgia. You cannot compare the world of today and the era when Post offices were the only main route of communication. It is pointless comparing analogue and digital mechanism. Nigeria must catch up with the global pace or remain a skunk forever. In the global arena, there is no space for the weakest link.

Do I stand to profit if naira is devalued? Of course and very heavily because of the exchange rates. Yet I know that it is economically and morally wrong to devalue the naira when the export Nigeria has is oil which is experiencing a glut in the market place.

I think your problem is that you so much dwell in the past that you fail to acknowledge the present and the future. Such mindset is retrogressive.
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jollymizzle:
I'm afraid you are not thinking of the bigger picture which is if we deregulate inflation comes in and nothing you have been buying will stay the same,workers will go and strike and the government will have to increase the pay.come in inflation round two and the fearful thing is the cycle can continue until we become another Zimbabwe God forbid.if you stayed in Nigeria when people who didn't even have a thing to do with the dollar were hiking prices some at 100% what will happen should the government do that to us

But you are already experiencing inflation so you are trying to avoid a scenario that is already happening. What you fail to realise is that inflation and currency depreciation cannot be curbed by government diktats. I have a Samsung phone today produced by a newly industrialised country called South Korea whose currency, the South Korean Won, exchanges for around 1150 to the US dollar. If a government can simply fix exchange rates, the South Korean Won would never, nor would any currency, experience substantial currency depreciation.

As for labour unions demanding and getting payrises, you fail to realise that the federal and state governments in Nigeria are struggling to pay workers at current wages and you think they can increase wages.

DropShot:

Whatever hardship Nigerians are going through now will become a child's play if sourcing for forex is completely left in the hands of parallel marketers.

In fact, I don't know of any country that does that successfully. If you know, I'll appreciate a few examples.

There are numerous examples of countries with floating exchange rate regimes which a cursory search of the internet can reveal. Countries are more likely to maintain a floating regime, intervening only if there is a temporary crisis and if there is sufficient forex reserves. Here is one example in our continent:

South Africa has a floating exchange rate system. This means that the rand exchange rate is basically determined by the forces of demand and supply in the foreign exchange market. The South African Reserve Bank can, however, participate in this market by buying or selling other currencies. At present the policy is generally to stay out of the market and to allow market forces to determine the exchange rate.

http://www2.resbank.co.za/internet/Glossary.nsf/0/6e77f482c063ea5742256b430031f732?OpenDocument

What you need to show is one single example of a country that ran a fixed exchange regime successfully with insufficient forex reserves. I will be glad to enlightened by you on this topic.

chinchum:
I did not ask for gradual devaluation, i only said gradual exposure to such market forces, a govt that can not refine its crude oil and throws the naira to market forces is wicked. We are not ready for competition, the naira would be outclassed. If you throw Naira open to market forces and it gets to say 500/usd, are you aware that litre can cost as much 300-350 /litre . Do you know the reverberating effect that would have on the economy of the nation? Lets fix the basics like local refining and power supply improvement before thinking of market forces determining exchange rate of naira. One has to to be wicked or naive to suggest that.

Yes, a government that cannot successfully provided basic amenities as you admit will somehow successfully suspend the laws of demand and supply. The irony is lost on you. If you maintain a fixed exchange rate regime, the Naira will end up at N500 to the 1USD anyway. We have been fixing currency rates since the inception of the Naira and yet here we are today with the Naira at N320 to the dollar.

musicwriter:


Unfortunately, you people thinks once the Naira is devalued or free-float as you call it, the problem would be solved. This Egyptian example is a lesson to you.

Our fundamental problem is not free float, exchange rate, e.t.c. Our problem is the government is not earning enough dollar at the moment. Our fundamental problem as a whole is we don't export enough to earn dollar inflows.

If you like make it 1 Naira to $1 officially, or N320 to $1 officially. There'll still be black market.

If you make the Naira 320 to $1 today, the black market would skyrocket to 500 to $1 immediately. Forcing us to make a second devaluation of N500 to $1, officially. And so on............. And before you know it we become another Zimbabwe.

That's how Zimbabwe got 1 Trillion single note!!.

I'm sorry, you are not very bright. In a floating exchange rate regime, there can be no black market. The black market exists because the government has sought to fix the price of a tradable product below its market value. What the Egyptian example shows is that a fixed regime is impractical without sufficient reserves - a lesson Nigeria fails to learn.

I have heard a couple of people mention Zimbabwe as offering an example of the dangers of having a floating currency. I wonder what these people are smoking as again, Zimbabwe offered a telling lesson in the dangers of a fixed exchange regime which they eventually had to abandon after hyperfinflation ravaged the economy. See an excerpt from 2007 noting the consequences of Zimbabwe's fixed exchange rate regime - note the point in bold about the double-tripping opportunities it offered:

By Byron Dziva In Harare

12:01AM BST 07 Sep 2007

Zimbabwe injected a partial element of reality into its chaotic economy yesterday, abandoning its fixed official exchange rate of 250 Zimbabwean dollars to the US currency.

It fixed the new rate at Z$30,000 to the US dollar, an official devaluation of more than 99 per cent, but still well above its true value — on the black market US$1 fetches around Z$260,000.

The official rate is used for government transactions, but is also a hugely lucrative opportunity for senior officials in Robert Mugabe's regime, who are entitled to use it exchange the virtually worthless Zimbabwean currency for US dollars.

Mr Mugabe's mismanagement has given Zimbabwe has the highest inflation in the world, officially 7,634 per cent, and its economy has been shrinking for seven years.

http://www.telegraph.co.uk/news/1562485/Zimbabwe-abandons-fixed-official-exchange-rate.html

hmohammed:


So wen you know that our major proem is dat we don't have enough forex, that means a devaluation of the Naira will not solve our problem and that is exactly what the OP iss talking about.

If something (the dollar in this case) is scarce, the best way to manage it is allowing it to become more expensive. Insisting on making it cheap is a convoluted and ineffective way of addressing scarcity.

greenpasture:


What makes you think Nigeria needs a low FX rate?

A low fx rate is not necessarily a bonus when you are trying to restructure your economy away from imports into the real sector.

The problem is that Nigerians want to avoid changing their economic behaviour and dying occupations while maintaining their old life style. There are many imaginative and legal ways of paying for legal fx imports. In fact the increase in dollar rate is more than offset by the margins available in greenfield bottom of the pyramid opportunities.

If you are in services, trading, arbitrage, luxury real estate you will suffer. That's the name of the game.

Nigerians should boot up and get with the program.

It's not a question of me thinking that Nigeria needs a low rate - the market is clearly signalling that the Naira needs to fall as dollar supply is insufficient to meet demand. What better way to curb demand than to allow the dollar reflect its true market value? You seem to have an inordinate faith in your government's ability to suspend the laws of demand and supply.

dicefrost:

If cbn relinquish control of the naira, and allow it float, won't we eventually have hyper inflation? If feul importer buy dollars at 320 what will become of us? We won't automatically cut our dependence on imports in a year. So there ll still be more naira chasing d dollars and it ll keep going up, untill it becomes #1000 to a dollar

You will eventually have hyperinflation as dollar inflow is insufficient to meet demand. Dollar inflow will not materialise, except where there is an oil price rally, in an environment where foreign investors know that the purchasing power of their forex does not reflect its market value due to the fixed currency rate regime.

If you maintain a fixed exchange regime, dollar will become even more scarce as the CBN needs to ration it restricting the ability of importers to access forex. It is the primary reason why you have been experiencing fuel scarcity in the last few months. In other words, your worst fears about currency depreciation are already materialising.

MathsChic:


Seriously? A free-floating exchange rate in Nigeria adjusted by demand and supply when the country hardly produces anything for its own consumption? There is a reason emerging economies don't have a free-floating system. Look into that.

See my comments above.

emorse:


Don't you think we're still too import dependent for this move? We import almost everything we consume even as ridiculous as tooth picks! Allowing the naira to float freely will without doubt lead to the increase in the cost of importation which will transcend into more economic hardship for the average Nigerian.

A more logical move -which I suspect is the intention of Mr President- would be to first improve our local capacity and there after, leave room for competition between local products and their foreign counterparts by allowing the naira to float as you earlier suggested. Of course by then the higher prices of foreign goods would work in favour of local goods thereby reducing the pressure on the dollar.

In all, I think your suggestion is brilliant but it can't be done impulsively. Measures have to be put in place to absorb the inevitable shock that would result from it.

What better way to curb imports than to make them more expensive? If imports are more expensive, that creates incentives for investing in local capacity without the economic distorting effects of a fixed currency regime.

InvertedHammer:

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Yes. Welcome to the 21st century my friend. The only thing that is constant is change. We live in a fast paced world and most Nigerians rely on imports unlike the era you reminiscing with nostalgia. You cannot compare the world of today and the era when Post offices were the only main route of communication. It is pointless comparing analogue and digital mechanism. Nigeria must catch up with the global pace or remain a skunk forever. In the global arena, there is no space for the weakest link.

Do I stand to profit if naira is devalued? Of course and very heavily because of the exchange rates. Yet I know that it is economically and morally wrong to devalue the naira when the export Nigeria has is oil which is experiencing a glut in the market place.

I think your problem is that you so much dwell in the past that you fail to acknowledge the present and the future. Such mindset is retrogressive.
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I can not force the recalcitrant horse to drink water o. I withdraw this indulgence

blackprowler:


I can not force the recalcitrant horse to drink water o. I withdraw this indulgence

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Superior argument always thrives. Good luck. Expand your horizon.
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4Play:





Yes, a government that cannot successfully provided basic amenities as you admit will somehow successfully suspend the laws of demand and supply. The irony is lost on you. If you maintain a fixed exchange rate regime, the Naira will end up at N500 to the 1USD anyway. We have been fixing currency rates since the inception of the Naira and yet here we are today with the Naira at N320 to the dollar.

To what extent does suspending the laws of demand /supply determine provision of amenities?

When did we start having a sharp disparity between the naira at cbn rate vs naira at parallel rate ? Throwing it open to market forces would make things worse, costlier to build infrastructures and even kill the few manufacturing industries we have locally.
case study of SAP devaluation of naira didnt help the economy , it made it worse, many manufacturing companies closed down during that era, because the basics were missing. i bet you would have argued SAP devaluation of naira in the 80's would have encouraged exportation.

You need to think deeply. lateral thinking at all times is dangerous. You dont ask lobi stars fc to start playing uefa champion league, it would get his ass thoroughly whooped, except you have bought standard and exposed above average players.