brixton:
Bubu the deaf and certificateless emperor from Daura has done it again!

tiwiex:


I don't think Buhari has any economic plan. The drop in naira was expected with the capital control. it was a futile effort. It didn't require an experiment to do what CBN just did. The demand and available supply already spelt the situation. So why delay the evil day and suffer while at it? Like I said, Buhari will deliver not because he knows what to do but because reality eventually leaves him with no choice. We didn't need to get to this point on FX and definitely not with the Niger Delta. CBN made the announcement 3 weeks ago but just released the modalities today. They were clearly not ready and just started work on it. Please help Nigerians beg him to slow down on his ego for the sake of the country. Let the advisers take charge. That is why they were appointed. Good move at last but Buharinomics just means trial and error without a need for the trial due to available expert advise.

davide470:



http://nairametrics.com/its-official-cbn-floats-the-naira-the-implications-for-you-and-i/

989900:
The new CBN policy to float the Naira 'sort of' (this is not a 'full/pure/clean float', rather, what we refer to as 'dirty/managed float')can either turn to be a good thing, or a bad thing.

In this breakdown, I'll like to omit the hue: "appointed primary dealers" . . ..

Pros:

1. The new policy will foster Forex inflow through FDIs, both portfolio (some rules need to be set for those as regards withdrawal) and long term investors.

2. It will lead to less hoarding (which is one of the major albatross of the Naira) if managed right.

3. It will lead to appreciable value of the Naira in both the inter-bank and BM rates, if the CBN will furnish it with far better supply than it has been doing lately.

4. It will lead to an even more appreciable value of the Naira in both the inter-bank and BM rates, if the CBN can implement the 'Boyo' approach by implementing 'dollar certificates' in payments to governmental organs.

5. It will lead to appreciable value of the Naira in both the inter-bank and BM rates, if the dollar weakens and oil prices keep going north of $50 along with increase in national production.

6. It will lead to appreciable value of the Naira in both the inter-bank and BM rates, if the Mining/Agric/manufacturing/export sector are well funded with Forex, low interest loans, and industry growth enabling laws.

7. It will lead to appreciable value of the Naira in both the inter-bank and BM rates, if reasonable stable power supply can be sustained.

8. It will lead to appreciable value of the Naira in both the inter-bank and BM rates, if we can get our refineries working at near top capacity.

9. It will lead to appreciable value of the Naira in both the inter-bank and BM rates, if the current transparency, prudence, and accountability campaign can be sustained along with recovered Forex loots.

10. It will lead to appreciable value of the Naira in both the inter-bank and BM rates, if reasonable/sustainable foreign withdrawal limits are set on Naira ATM cards.

11. It will lead to appreciable value of the Naira in both the inter-bank and BM rates, if the population can be educated on the need to patronize Nigerian made goods and services.

12. It will lead to appreciable value of the Naira in both the inter-bank and BM rates, if ultimately, the CBN can abort its criminal ways (I still wonder why banks are allowed to keep over 20 billion dollars cash money in their vaults without enough CRR nor SLR to back it up, or do they?).

The Cons:

Just flip the 'pros' on its head, and you'll have anarchy: demise of the Naira.

grandstar:


You have never ever supported devaluation! What is all this?

grandstar:


Buhari's understanding of economics is lamentable and should leave policies to First Class advisors. Unfortunately, Adeosun and Emefiele do not fall into that class.

Emefiele's biggest sin was he allowed the president to take over the affairs of the autonomous CBN. His lesser sin was that he began applying some restrictions on foreign controls.

They still need to lift restrictions on 41 items

manmidtexy:


What is going to be the General Online Platform or website of Operation for this Government / CBN / Interbank / Approve Dealers to End user and Coys Rate initiative ?

macanu:
tell ur president to stop talking from both sides of his mouth,after refusing to devalue now go backs to his vomit.confusion everywhere

wellmax:


And you that has no President, why not seek to understand simple Economics before spewing trash.

dolpaz:
We no understand all these Englisch, Grammar, Oyinbo..

My own... Is Form A part of the 41 Items Banned?

davide470:



http://nairametrics.com/its-official-cbn-floats-the-naira-the-implications-for-you-and-i/

CHANCEMAN:


What is it ?

PatcomAutos:
If you can read through the lines below as seen on Reuters news, for those who think the autonomous/black market will just get out of the way like that, then we are still learning because if you read through the lines you will understand exactly what i am trying to say.




Mr Emefiele said that categories of items classified as “not valid for foreign exchange” would continue to be shut out of the official dollar markets, raising the prospect of continued trade on a parallel market.

Chart: Nigerian Naira
Instead, the government rationed foreign currency to so-called strategic industries, bringing other businesses that could not access foreign currency to a standstill or forcing them to a flourishing black market where the naira has regularly traded at above N350 to the dollar.

Razia Khan, chief economist for Africa at Standard Chartered Bank, said that Nigeria had boxed itself in by leaving the devaluation too late. That had left a backlog of $6bn-$9bn of unsatisfied foreign exchange requirements, which would be impossible to fulfil in one go without reducing foreign reserves to dangerous levels.

designking:

With the flexible FX market regime, sourcing your dollar for your export activities will no longer be an headache.

hotdi:


It is called single window Forex.
CBN will no longer fix official price for exchange rate anymore, but let the demand and supply forces of the market determine the rate.
Single in the sense that they wouldn't be official price on one side, and parallel market on the other side.
In this case, the CBN ceases to be the only supply of e.g. Dollar into the market. Also, CBN becomes a participant in the market
instead of playing the boss. Its influence becomes minimal base only on regulatory roles.

Are u satisfied?

989900:


This is different from devaluation. This is 'dirty float', and this could as well go terribly bad, if not backed up with honesty and matching fiscal policies.

ATEOTD, these are all grammar and terminologies, what we do in real world demand and supply, would define where we stand.

macherie1:
What CBN has just done is shoot themselves in the foot. An economy that is largely dependent on import has no business with a full float exchange rate policy. We are net importers. Devaluation of our currency doesn't help anyone. If we were exporters, devaluation will make our goods more competitive but as importers, we are at the mercy of the banks who will exploit the policy to their own benefit.

Asian Tigers like China who understand their economy had a fixed exhange rate policy for decades and later changed to a managed float to encourage investment. Never free float. Why? As Net exporters, they had to keep their currency undervalued compared to other western nations. Hence their goods became very competitive so much that Americans now import largely from China. Most American companies even have their factories in China.

What should Nigeria do as a Net Importer? Have a managed float exchange rate where the currency is prevented from being fully depreciated against market force to prevent a very sick economy from imminent collapse. Then Invest in infrastructure and develop export. The Asian Tigers broke the jinx of poverty in their countries by developing their export trade. The government should look at the things that Nigerians spend dollars on importing and loan money to Nigerians who can start producing those things here in our country. Invest in research and human capital development.

But first, Buhari should fire every single member of his economic team. There are very weak and lack Ideas. Instead of them to study economies that have gone through this phase and what they did to get out of it, they keep applying trial and error economics, toying with the livelihood of over 200 million people.

erico2k2:

Yeh but dnt you think he is on the Broadway to full divaluation? .cos if this magic flotation dnt work what next.

989900:


It would not work unless it is matched with sincerity and proper fiscal policies, with proper implementation to match.

If the above is not done -- we are screwed as fcxk!

I mean, we are going into the world now, so to speak . . . Yoruba will say "mo fi olorun si yin o" (I take God escort una).

Now is the time to liberate 'NEPA' and 'NNPC' . . . I mean we are at that junction now, we cannot afford not to have regular power supply right now, nor afford to continue importing refined petroleum products now, or having fuel scarcity, or have a government (FG, State, or local) that embezzles recklessly -- it is make or break now!

It is like when a child from the village leaves home for the first time for the city, to go and start surviving on his own.

It is a 'dirty float' though, not a pure or 'clean float', so a first line safety net is still in place, à la CBN's interference via periodic buying and selling.

jinglesbaby:
How many things are "Made in England" despite their good roads, hospitals, education et all? It's mostly because of taxes! We all go to China, India, Pakistan, Bangladesh and Vietnam to import "common pant (what we call pata in Yoruba)"! Even Marks & Spencer where I buy my undergarments go to Asia to buy! If we can start running "sweat-shops" sha like we have in Aba, maybe we will attract foreign investment too. The only things that are made in UK these days are "mixed-race babies and sham marriages" ! We dont have all these basic social amenities that would attract foreign investors no matter how willing they are to invest because of the foreign exchange policies. There are always two sides to a coin at the end of the day.

Shym3xx:


Lol. Even the Bank of England intervenes all the time to keep the Pounds Sterling afloat. Now imagine a country as unstable as Nigeria, with a very weak currency and, volatility in everything - yet they think pure float is the best option and some investors would fly out of thin air to invest there. It will dawn on them soon.

Anyway, anyone interested in reading the implications of pure floating on emerging economies can read this research paper from UCLA (it cited Russia, Mexico et al): http://www.anderson.ucla.edu/faculty/sebastian.edwards/emerging.pdf

I don't know how Nigeria will escape hyperinflation (with the crazy inflation already plaguing the country) and most likely a default with this one. I'll be on the look-out, regardless.

As for the lousy economic theorists, who're no different from MBA holders who can't run a simple business, it'll dawn on you lot as well, when poverty hits you in ya faces lool.

Shym3xx:


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.

Seun:
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.

chrisnero:
In the words of Ifeanyi uba, the govenor of CBN and minster for finance is applying academic economics instead of Pratical economics. The governor said" the have a enough reverse to play in the market that is probably €26billion as qouted by shararepoters. With the new policy, there will be rush for dollar which will increase the price because the new price will be determined by the market force as he said.. when the demand is high,the price will increase. We have the issue of militancy in the Niger delta region which constitute more than 70% of our reserve, now tell me, when the €26billion goes down due to rush,how can we replenish our reserve? Try and error is all I see in this policy