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Nairaland Forum / Nairaland / General / Business / CBN Floats The Naira, The Implications For You And I (77835 Views)
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Re: CBN Floats The Naira, The Implications For You And I by sunerobaba: 5:59pm On Jun 15, 2016 |
joseph1013:Receive sense in jesus name |
Re: CBN Floats The Naira, The Implications For You And I by AreaFada2: 6:00pm On Jun 15, 2016 |
Meringe: The show is run by Buhari. Was the CBN gov not there during GEJ's time? Blame him for not resigning when Bubu began dictating his draconian policies of the 1980s. 1 Like |
Re: CBN Floats The Naira, The Implications For You And I by Guyman02: 6:00pm On Jun 15, 2016 |
Max24: Have you ever heard any Chinese or Ghanaian leader admit to any westerner that corruption is a problem in China or Ghana? They deal with the problem drastically at home and when they are outside they tell you that China is the best investment destination and that the racist Chinese are the most accommodating set of people. I saw the Chinese Foreign minister angrily telling a western journalist to get educated when he mentioned that China has a human rights violation problem. See the video here https://www.youtube.com/watch?v=L99fiuE4-0c 2 Likes |
Re: CBN Floats The Naira, The Implications For You And I by adebrave1(m): 6:04pm On Jun 15, 2016 |
[quote author=jam13 post=46603180][/quote] I'd like it if you gonna drive me through it. I'd appreciate |
Re: CBN Floats The Naira, The Implications For You And I by Pavore9: 6:05pm On Jun 15, 2016 |
erico2k2: The FX earned takes care of raw materials while the machinery and parts being used has been successfully fabricated locally cutting off the hitherto importation from the U.S. |
Re: CBN Floats The Naira, The Implications For You And I by Favolly(f): 6:05pm On Jun 15, 2016 |
Finally, reason has prevailed! Best 'economic' news I've heard all year... 2 Likes |
Re: CBN Floats The Naira, The Implications For You And I by adebrave1(m): 6:05pm On Jun 15, 2016 |
[quote author=jam13 post=46603180][/quote] I'd like it if you gonna drive me through it. I'd appreciate |
Re: CBN Floats The Naira, The Implications For You And I by Nobody: 6:07pm On Jun 15, 2016 |
awesomeb1783:what a lame attempt at playing smart. so is Nigeria your personal property? am I not also a Nigerian? MYOB 1 Like |
Re: CBN Floats The Naira, The Implications For You And I by Kingspin(m): 6:08pm On Jun 15, 2016 |
blackpanda:Price of goods and service to go up further, expert warns. |
Re: CBN Floats The Naira, The Implications For You And I by Kingspin(m): 6:09pm On Jun 15, 2016 |
blackpanda:With the new policy. Price of goods and service to go up further, expert warns. |
Re: CBN Floats The Naira, The Implications For You And I by AreaFada2: 6:11pm On Jun 15, 2016 |
Max24:When Buhari stops using dozens of SAN to fight his certificate fraud case in court and simply present it, we can let him talk about corruption. Until then he is one big scam and hypocrite. |
Re: CBN Floats The Naira, The Implications For You And I by bajirao(m): 6:13pm On Jun 15, 2016 |
[quote author=Rilwayne001 post=46600246][/quote] |
Re: CBN Floats The Naira, The Implications For You And I by jinglesbaby: 6:15pm On Jun 15, 2016 |
Exactly! We should have seen this coming since the fuel scarcity issue! First there was scarcity and then an increase in price but with a cap and more availability. There has been dollar scarcity and hoarding since, it could even be that the scarcity and hoarding were artificially created by some greedy pple somewhere or forced on us by the powers that be from Europe and US! God, help us all! In developed countries where fx exchange rate is determined by market forces, it's high company taxes that led to the exodus of a lot of companies and taxes in these so-called developed countries are even put to good use which citizens benefit from. Now compare Nigeria? GreatEngineer: |
Re: CBN Floats The Naira, The Implications For You And I by Laredojohn(m): 6:20pm On Jun 15, 2016 |
Monday is already by the corner.. let's wait and see |
Re: CBN Floats The Naira, The Implications For You And I by Max24: 6:31pm On Jun 15, 2016 |
Guyman02:At the rate we are going in this country we will even if God should come down and ask about our corruption status maybe we would deny it even to God himself. My bro my view is that let's put pressure first on these greedy politicians and then we can talk of defending our integrity. Jesus said he that confess his sins will be forgiven but he that covers his shall be exposed. Let's not cover these corrupt politicians. For the west they already have an effective system that deals with the corrupt among them - what do we have ? You can not give what you don't have. See how Panama papers exposee led to the resignation of Iceland's PM but strengthened our own Senate President. Let's have strong laws first and then we call tell the west to go to blazes. 1 Like |
Re: CBN Floats The Naira, The Implications For You And I by Shym3xx: 6:43pm On Jun 15, 2016 |
Let me crack some jokes before I disappear. Where that nyggah sukkot at? Sukkot, since you're moving to naij - better make sure they pay you in US dollars cos you don't want to come back with something that looks like this toilet paper below: ^^^You'll bring a trillion naira back to the UK and you'll get £5 back in return, Mr. Nigerian Trillionare looool. |
Re: CBN Floats The Naira, The Implications For You And I by 4everGrand(m): 6:45pm On Jun 15, 2016 |
alexistaiwo: So you chose to live in a 'shiithole'? You wanna marry someone from a shiithole? You plan on doing business in a shiithole? My country IS NOT a shiithole, young man. 2 Likes |
Re: CBN Floats The Naira, The Implications For You And I by TheGoodJoe(m): 6:49pm On Jun 15, 2016 |
Shym3xx: Thank you very much. Super post. Let me look into the document and get back. |
Re: CBN Floats The Naira, The Implications For You And I by designking: 6:54pm On Jun 15, 2016 |
Shym3xx:A step at a time bro. We need the economy to heal gradually and certainly wages will be better soon. |
Re: CBN Floats The Naira, The Implications For You And I by babadee1(m): 6:55pm On Jun 15, 2016 |
joseph1013: The mark of good leadership is that if something is not working you change tactics even if it makes you look bad. I think this new policy should be a welcome change and not another opportunity for wailers to wail. Better late than never. |
Re: CBN Floats The Naira, The Implications For You And I by Shym3xx: 7:02pm On Jun 15, 2016 |
designking: Anyway, I just checked the countries using free/pure float in Africa and, it's only Somalia. Well, it seems Nigeria is in good company. Outside Africa, only Canada and US use free/pure float (Canada is too rich with small population and the US has petrodollar, world currency, and massive gold) - while the UK, Australia, Mexico, EU, Chile, Japan, Norway, Poland, and Sweden do manage their float and their apex banks do intervene from time to time. I know of the UK and EU. And Japan doesn't just manage its currency's float- it manipulates its currency lol. Nigeria and Somalia - two great countries and pace-setters when it comes to emerging economies. |
Re: CBN Floats The Naira, The Implications For You And I by Image123(m): 7:05pm On Jun 15, 2016 |
afroditte: Sure, I stand by whatever i said. All was done in the best interest of the country and to plug and block the leakages of a seriously bleeding country. When there's trouble, you TROUBLEshoot until you arrive at a good place. The new plan is not the destination by the way, it is a when all else fails policy IMHO. It is not a magic wand that sweeps away all our economic woes. Buharinomics is still very much on point compared to what obtained previously. That one where FG borrowed and looted with impunity, where the coordinate minister confessed to high blood pressure and incessant headache. I'll choose Buharinomics a thousand times. The man is not as rigid or bigoted as painted, this picture is clearer by the day. 1 Like |
Re: CBN Floats The Naira, The Implications For You And I by Oyingold: 7:09pm On Jun 15, 2016 |
Explanation on NairaMetrics The Central Bank Governor has just announced a full float of the Naira in a press conference in Abuja. The CBN Governor informed a stunned audience that the exchange rate will be market determined and that the CBN will also participate in the market occasionally. The CBN also maintained that the 41 items banned last year for access to forex for imports remained banned. The CBN has also appointed primary dealers for the first time which is expected to help boost FX liquidity in the market. In a remarkable turn on events for a CBN Governor and Government that have for months held tightly to an artificial exchange rate, the CBN Governor also revealed that we will be operating a single market suggesting that we will no longer have two windows. The CBN also introduced a two way quote which basically means that the market will act like the stock market where buyers and sellers will state price and quantity they are willing to sell. The CBN Governor also confirmed that all the “pent-up” demand awaiting to be filled (for example airlines looking to repatriate their dollars out of Nigeria) will be met at the interbank market but advised caution for buyers looking to front load orders. In what was quite a remarkable press conference, he clearly stated that the CBN has enough reserves to meet demand and is willing to put its reserves on the line. The market will also include financial products such as futures where businesses who need dollars in the near distant future can now hedge by buying at a price today but get the dollars delivered when they actually need it. Implications As per the new price of the Naira, the CBN Governor mentioned that the price will be known when the market opens officially on Monday. The implication of this could be wide-ranging and we will know more as more details emerge after the press briefing. However, we can only but conclude that the end of the black market is near as anyone and everyone can now buy dollars at any bank or with authorized dealers at a price that is market determined. Nairametrics had reported severally that the black market rates might drop if the CBN announces a float as investors and businesses who refused to import dollars into Nigeria can not bring in their forex at a price they believe is market determined. This might take some time at the worst but we believe the market will be flooded with liquidity in due course. Indeed we anticipate some volatility as the market takes shape and tracks how liquid the market will be. In other countries where a full float was launched, the value of the currency of the home country did plummet woefully before it found its level. However, the rates between the interbank market and the parallel market did narrow which we expect will also replicate in Nigeria. The CBN Governor did not dwell on the controls currently in place such as limits to withdrawals of dollars from your bank domiciliary accounts or spending limits when abroad. However, we believe these limits will be removed in due time as the market becomes more liquid. The CBN in its recently released policy details also revealed that the BDC’s will not be able to buy dollars from the interbank marker essentially throwing them under the bus. What this also means is that if you own cash dollars then you have a choice of either depositing it in a bank or selling to Bureaux De Change (BDCs). If you want to buy without filling in all the requirements banks may ask you for such as your passport, then it’s probably the BDC you want to go to. Bureaux De Change is officially a cash and carry market where major transactions can no longer take place. The incentives for banks to round trip and sell to BDCs is effectively removed since the interbank is market driven and more liquid. The CBN also said applicable exchange rate for the purpose of import duty payments shall be the daily inter-bank FX closing rate as published on the CBN website. This means import duties will now be paid based on the closing exchange rate for the day at the interbank market. These rates can be obtained at the website of the FMDQ. Transactions involving purchases of things like airline tickets, visa renewals, master card/visa transactions for online purchases abroad, school fees, medical tourism etc. will also now be paid using the interbank rate at the close of business every day. So essentially, the price you pay for tickets, visas etc. can vary from day to day depending on the exchange rate for that particular day (except the CBN agrees with the merchant to fix a spot price). The CBN folks, will no longer determine how much you pay for FX. That power is now in the hands of the market. Even if the parallel market still exist, the interbank market will at worst mirror that price eliminating a price disparity that allows arbitrage to thrive. 3 Likes 1 Share |
Re: CBN Floats The Naira, The Implications For You And I by Shym3xx: 7:14pm On Jun 15, 2016 |
TheGoodJoe: This is another research paper from Harvard, albeit it's more of a comparative analysis of exchange rate regimes: https://www.hks.harvard.edu/fs/jfrankel/ADBpaperOnExRateRegimes.pdf And this is the 2014 IMF report of FX arrangements of different countries: http://www.imf.org/external/pubs/nft/2014/areaers/ar2014.pdf |
Re: CBN Floats The Naira, The Implications For You And I by designking: 7:16pm On Jun 15, 2016 |
Shym3xx:Lets give this policy some time, at least, we will be around to judge the outcome. I know there is going to be a lot of reviews and regular adjustments to this policy as we move forward. 2 Likes |
Re: CBN Floats The Naira, The Implications For You And I by darlenese(f): 7:26pm On Jun 15, 2016 |
OK So that means , #1 = $1 Abi? |
Re: CBN Floats The Naira, The Implications For You And I by TheGoodJoe(m): 7:30pm On Jun 15, 2016 |
Shym3xx: I did a very quick study of the report due to time. So my opinion is not concrete. I think the main concern between a fixed (pegged) exchange rate and a floating one has to do with the direct impact on inflation. Most modern economic authors agree that a fixed exchange rate is susceptible to shocks from external crisis and external economic reports. While a fixed one receives less shock. If you study the inflation of goods and services due to the recent drop in Crude Oil Prices, you will agree with the economic theorists that the effect is drastic. We are an emerging economy and the recent high inflation rate supports this theory. I think the floating/flexible exchange rate is the right move. If we are going to reduce the impact of foreign economic news on the inflation here. This will create a favorable market for investors. 2 Likes |
Re: CBN Floats The Naira, The Implications For You And I by Seun(m): 7:37pm On Jun 15, 2016 |
If they are truly floating it, why is the system so complicated? It makes my head hurt. It looks as if the primary dealers are the new CBNs. 1 Like 2 Shares |
Re: CBN Floats The Naira, The Implications For You And I by hezsquirt(m): 7:40pm On Jun 15, 2016 |
alexistaiwo:dundi,, u calling ur country a shit hole....that means ure no different from a maggot.. #no offense.. btw, u said Ull succeed in this shithole, THEN ULL BE CALLED A KING SHITHOLE....oponu |
Re: CBN Floats The Naira, The Implications For You And I by Shym3xx: 7:41pm On Jun 15, 2016 |
TheGoodJoe: You did selective reading (albeit ya conclusion is also wrong) but didn't read this except from the end of page 4 and beginning of page 5: This flexibility (floating), however, usually comes at the cost of some loss in credibility and, thus, tends to be associated (on average) with higher inflation. Alternatively, fixed exchange rates reduce the degree of flexibility of the system but impart (in theory) a higher degree of credibility to policy making. Since the public believes that, under fixed rates, the primary goal of monetary policy is 5 to preserve the exchange rate parity, they moderate their wage and price expectations, thus allowing the economy to attain a lower rate of inflation. ^^^The key point there is inflation. |
Re: CBN Floats The Naira, The Implications For You And I by Adeevah(m): 7:42pm On Jun 15, 2016 |
Re: CBN Floats The Naira, The Implications For You And I by TheGoodJoe(m): 7:43pm On Jun 15, 2016 |
Seun: Too complicated. The main thing is that the floating exchange rates makes the market take care of itself with less government input. The demand and Supply determines the exchange Rate. Now the Central Bank will not have to use our reserves to support institutions and businesses that operate under the fixed exchange rate. Remember CBN governor talking of providing forex for Dangote's refinery. Now that pressure is off the Government. |
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