joseph1832:
Yes what if! Tell me, how does the exchange rate affect you? Has it so far hampered you from performing you duty in your place of work? And how come your master only focus on those operating dormicilliary account? I believe they're not the only ones living in Nigeria are they?

joseph1832:
The question you should ask yourself is, have there ever been a time in Nigeria that the price of good drop?

[s]Even the price of transportation is still high knowing that petrol isn't 97 Naira anymore but 87 Naira.
[/s]

Where are they selling petrol N87 per litre?

neurologist:
stop making fool of yourself...u have lost the respect I have for you for the past few weeks.. I think u nid to go on a break

neurologist:
stop making fool of yourself...u have lost the respect I have for you for the past few weeks.. I think u nid to go on a break

Bayswater:
Now that you know the reason for decline in the naira value, will you disprove the issues barca raised? I

mygee2:
Shut up bastard u never see light in anything

Ordinarily people live and learn. You just live. You disease-ridden plot-less melodrama of an uneventful life

helpee:
@ barcanista, thanks for the analysis. kindly disregard those that have nothing to contribute except shouting wailing wailers. But i disagree with you. naira actually depreciated against the dollar because of excessive speculation. As you know, due to the ban on 41 products importers from accessing forex at the official rate, they had to source it from the parallel market. The excessive demand for forex by these importers from the black market at first created a scarcity that pushed the dollar up temporarily. speculators then cashed on that and started hoarding dollars thinking the dollar will keep rising against the naira especially since the new govt has no concrete plan in place. i was almost caught up too. i was advised to change most of my daily sales to dollars and then deposit in my DOM account in speculation of a further weakening of the naira. therefore, the banks were flooded by speculators with dollar deposits and many of them under the disguise of importation are laundering the money abroad via transfer. so, by refusing to accept the dollars, the CBN is playing a very smart move aagainst speculators. many people are therefore caught with dollars which they cant transfer or even deposit except to convert it to naira. therefore, the economy is flooded with dollars and demand is less than supply so the dollar must come down.
IS IT SUSTAINABLE/
Yes but we will temporarily suffer in sacrifice for a prosperous naira. importers will be temporarily caught unaware. the CBN will only create a bereaucratic bottleneck that will make it difficult for anybody except importers to access forex. BVN is one of the them. money launderers that used to access forex and transfer via DOM account will be cut off by the bottleneck. speculators will not find it attractive to hoard dollars because unless they ggenuinely need the dollars, they wont be able to get value for it since they cant spend it locally, cant transfer and cant even deposit. what do you need a useless dollar for?
it is not easy to open domicilliary account in neigbouring countries like you suggested unless you are a citizen or permanent/legal resident so few will be able to divert import activities to the neigbouring countries. therefore, even without increasing local production of imported stuffs, the naira will still stabilise against the dollar at a favourable position cos the most damage done to the naira usually comes from speculators. once we only access just the dollar we need for importation, school fees and other legal business abroad, we will stop speculating with the naira .
Even if things are temporarily expensive, we youths should take up the challenge and start producing. you can start with toothpick for example cos it is part of the products banned from accessing forex officially. the bottomline is that if it will be sustainable we must support the CBN in this quest. this is the first policy of this govt/CBN that i support.

Mynd44:

That's why they always call their friends for backup so they can support their distortions.

I know no one will dare go back to November 2014 but interestingly, that's where the issue with the Naira started

MizMyColi:


That's why I mentioned economists cum historians.
Let's assume that it is Barca's intention to deceive us.

I expect that people who are well informed will take time from their busy schedule and set the records straight.

Also, if you ask me, I really don't think it is necessary to dig up archives from the past.
Because, those in that time must have flogged the issue then.

We have heard all too often how the PDP was and allies destroyed our nation.
APC was installed to salvage the situation.
Se grab?

So, I believe it's the reason for the rather topical than historical issue before us.

The big question now is can anyone inform us why this problem persists, and the way forward, if any?

AprokoMan:
[s][/s]

mygee2:
i don giv a phuck wt wailers

No you do, otherwise u wouldn't be here ranting like a stray dog from Ijebu Ode

eleven:


I honestly respect the way you made your presentations. Sustainability is a major concern here. One reason why I believe the CBN governor is just playing to the gallery with his cosmetic policies of forex. It's wuru wuru to the answer without a look at the opportunity forgone to the economy of his monetary policies.

Only possible hope I can see for sustaining his policies mid to long term is if he (CBN Governor) knows the future fiscal policies of this government and he is sure the government policies with back up his in the future, if not the Naira will definitely sky rocket in the nearest future.

Mynd44:

There are your answers.
https://www.nairaland.com/2501718/naira-appreciation-why-nigerians-should/2#36601146

Now to way toward, strict monitoring of the forex market. People are putting undue pressure and it is causing us not just pain but bloodshed. We would have to make sure a lot of the transactions are done through appropriate means which means the bank and not the BDC guys.

We need to control the amount of dollars and other foreign currency we have. We need to give priority to the Naira and hopefully with the refineries coming on stream (thanks to the past administration for "fixing" and pressent for "securing pipelines against vandals" we will import less petroleum products and reduce the pressure.

But saying the CBN's policy is wrong is laughable. Yes it is extreme but it is needed

barcanista:
The question is "why are prices of goods still high(and even goin high)"?

Ymodulus:
Domiciliary accounts were never designed for such purpose at the onset. They are to use Form A or Form M, or Bill of Collections or Letter of credit.
These are channels designed for international trade. Domiciliary or Western Union or Money Gram were never designed for such. So its time we follow principles as seen in developed countries.

The decision, the banks decided to take that line of action because they felt that the level of foreign currency that had in their vaults was above the optimum level that they could manage. Let me put it to you this way: when a bank accepts naira cash and it has excess cash in its vault, what it does is to take it to the CBN and the CBN gives them value for it. But when a bank has excess dollar cash in its vault, what is it going to do with it? If they take it to the CBN, what is the central bank going to do with it? So what you will find is that if they continue to accept it from bank customers, it becomes a useless piece of paper in their vaults because it is a non-earning asset. So that is why you are not going to blame banks that say they have excess foreign currency in their vaults and do not need it again because they don’t have a mechanism through which they can dispose of it and get real value.

Answer same as no1. They can get Form A or M, BTA , Bill of collections, Letter of Credit and other means of international trade.

Wrong ideology. Very wrong am disappointed in you on this, i believe you deliberately twisted this. There are several macroeconomic variables that comes to play to determine the price. In this case the law of supply of dollars and demand comes into effect.

I disagree with you. This will reduce the price. The only problem we have is we ourselves (Nigerian), when naira depreciates we are quick to increase price but when it appreciates we are slow to reduce price.

will sky rocket again. but it will be difficult. And that will take a long time.

I agree the naira is not appreciating. what we are seeing now is a psychological prank been played on us by the CBN

There are several things that works for egypt and cannot work for us. dont be so quick to use their analysis to set as an example for nigeria. Corruption kills us and the currency world is a corrupt world a case of blood money. and since we are yet to uproot the corruption, egypt model should not be set as an epitome block for we to follow.

its $50,000 annually. to exceed this amount you have to fill a form.

Mynd44:
To answer these questions, the OP needs to put in the post above what led to the Naira depreciating from 154/156 in November2014 to 196 in December 2014 first.

When you do that, we can then start to track the primary factors and how we can tackle the strength of the Naira viz-a-viz the price of goods in the market.

To take this issue from the events of May 2015 is just you attempting to put squares pegs in round holes.

AZeD1:

The funny thing is the Naira hasn't officially appreciated. All the policy did was pull the chair from under the speculators.

obi4eze:

Exactly bro. U just took the words out of me. I just want to see what effect this CBN policy will have on the economy because they can't continue to devalue the Naira.

MizMyColi:
smh.
*Deep Sigh*

Biko where are our inhouse staunch economists cum historians?

Jarus, Israeliairforce, Agabai23

Barcanista has raised valid points...

Let's attack the points raised and reach a valid conclusion concerning our currency appreciation/depreciation and the way forward.

I will be lurking on the sidelines...gleaning from reasonable insights.

hinwazaka:
i spent the whole day arguing this posit yesterday but it seems ever since this government assumed leadership the average IQ of our nation has dipped. The only way to improve the purchasing parity of our naira is to raise our productive capacity, period. There is no cosmetic change that can alter the power of the naira in the long term, NONE. I just hope when it goes south they won't swarm here to insult the CBN governor

Whynotthetruth:


Why not post what triggered it been devalued by 106% between 1984-85...

MizMyColi:


[size=14pt]*iGnored*[/size]

barcanista:
Is the value of the Naira really appreciating in the real sense or the CBN and the FG are playing pranks on Nigerians? Why are commodities still high in the market?

Ideal Situation
Ideally, customers operating domiciliary accounts will go to the banks, deposit their dollar and through that account they do whatever transaction that they deem necessary. The Banks inturn will take the dollars(and other foreign currencies) to the CBN.

The Buhari/Emefiele Situation
1. The CBN has stopped receiving dollars from banks, as a result the banks has stopped accepting dollars at the counter because their vaults are full.

2. Because of the restriction at 1(above) the demand for dollar reduces in the BDC. The BDCs seek every means to trade the currency including reducing the cost at the black market. The CBN will go to the press to scream "NAIRA IS APPRECIATING."

3. As a result of 1(above) the banks also refuse to request dollars from the CBN's foreign exchange reserve. The CBN will then come out to scream "RESERVE IS GROWING".

Is that the best way to manage the naira?

Salient Question and Effects:
1. What happens to a businessmen with domiciliary account seeking to deposit dollars and transfer to their partners abroad after buying the dollar from BDC or Bank?

2. The bank's refusal to accept dollar deposit means business transaction on that will be halted. Because no domiciliary account holder will be willing to withdraw from his account when he knows that he won't be able to make further deposit due to the CBN's policy except if his intention is solely for converting the dollar to naira for local transaction.

3. Instead of doing transactions from domiciliary account, businessmen will be left with no choice but to operate domiciliary account in neighbouring countries where they will be making transactions or resort to wiring money via Western Union in neighboring country.

4. As a result of 3(above) the cost of commodities will go UP because businesses will make up for the extra expenses. Also, that will mean reduction in business activities in the banks.

5. Should the above persist it will get to a certain point where there will be scarcity of the dollar in the market. When it get to that point, the dollar rate is astronomically shooooooot up in the market because demand will outweigh supply. At this point, the naira problem will be worse than it was.

Is The Naira Really Appreciating?
Make no mistake, the naira-dollar rate is yet to appreciate in the international market. As at May 29 the naira/$ rate was N199 in the market. The rate as at today Aug 5, 2015 is still N199. You can't appreciate a currency via the backdoor. Even the black market rate cannot be regulated through the back door.

What "Sane" Countries Does:
The CBN Governor Godwin Emefiele made it look like one can't deposit foreign currencies in cash in another country. This is contrary to the facts on ground. No country will shut down foreign currencies transactions in banks. Let me give two instances...

On February 27, 2015, the Central Bank of Egypt instituted a new policy to help the Egyptian pound. As part of the policy, Individuals and businesses are allowed a maximum of $10,000(or equivalent) deposit daily and $50,000(or equivalent) monthly. The measure would stop companies from buying large amounts of dollars from the black market and then depositing them briefly in banks in order to open letters of credit for imports.

In China the maximum daily deposit/withdrawal of foreign currencies is $10,000(or equivalent).

Is it not better to place a transactional limit for foreign currencies than discourage deposit completely(that will solve nothing)?
We don't produce, we import, we have no policy to promote local production nor infrastructures in place toencourage manufacturers, yet we expect the naira to appreciate. That is no done anywhere.


I will be glad to get the views of others.


God Bless Us All

joseph1832:
The question you should ask yourself is, have there ever been a time in Nigeria that the price of good drop?

Even the price of transportation is still high knowing that petrol isn't 97 Naira anymore but 87 Naira.

MODIFIED

And just to ask you a couple of salient question also, are those who operate dormicialliary account the only ones in Nigeria?.


Are they the only movers and shakers of the Nigerian economy? it seem your write up is purely based on them.

Funny how you just focused on them as if they're the only set of people who live in Nigeria.

Mynd44:
To answer these questions, the OP needs to put in the post above what led to the Naira depreciating from 154/156 in November2014 to 196 in December 2014 first.

When you do that, we can then start to track the primary factors and how we can tackle the strength of the Naira viz-a-viz the price of goods in the market.

To take this issue from the events of May 2015 is just you attempting to put squares pegs in round holes.

helpee:
@ barcanista, thanks for the analysis. kindly disregard those that have nothing to contribute except shouting wailing wailers. But i disagree with you. naira actually depreciated against the dollar because of excessive speculation. As you know, due to the ban on 41 products importers from accessing forex at the official rate, they had to source it from the parallel market. The excessive demand for forex by these importers from the black market at first created a scarcity that pushed the dollar up temporarily. speculators then cashed on that and started hoarding dollars thinking the dollar will keep rising against the naira especially since the new govt has no concrete plan in place. i was almost caught up too. i was advised to change most of my daily sales to dollars and then deposit in my DOM account in speculation of a further weakening of the naira. therefore, the banks were flooded by speculators with dollar deposits and many of them under the disguise of importation are laundering the money abroad via transfer. so, by refusing to accept the dollars, the CBN is playing a very smart move aagainst speculators. many people are therefore caught with dollars which they cant transfer or even deposit except to convert it to naira. therefore, the economy is flooded with dollars and demand is less than supply so the dollar must come down.
IS IT SUSTAINABLE/
Yes but we will temporarily suffer in sacrifice for a prosperous naira. importers will be temporarily caught unaware. the CBN will only create a bereaucratic bottleneck that will make it difficult for anybody except importers to access forex. BVN is one of the them. money launderers that used to access forex and transfer via DOM account will be cut off by the bottleneck. speculators will not find it attractive to hoard dollars because unless they ggenuinely need the dollars, they wont be able to get value for it since they cant spend it locally, cant transfer and cant even deposit. what do you need a useless dollar for?
it is not easy to open domicilliary account in neigbouring countries like you suggested unless you are a citizen or permanent/legal resident so few will be able to divert import activities to the neigbouring countries. therefore, even without increasing local production of imported stuffs, the naira will still stabilise against the dollar at a favourable position cos the most damage done to the naira usually comes from speculators. once we only access just the dollar we need for importation, school fees and other legal business abroad, we will stop speculating with the naira .
Even if things are temporarily expensive, we youths should take up the challenge and start producing. you can start with toothpick for example cos it is part of the products banned from accessing forex officially. the bottomline is that if it will be sustainable we must support the CBN in this quest. this is the first policy of this govt/CBN that i support.

agabaI23:
Physical fiscal policies like it was in 1984 comes to mind. The lightening is striking twice and it is a bad omen. MizMyColi, I'm here and I know these guy has come again with his abracadabra economics. We are watching!