adescopy:
Nigerians are very difficult to please.The Naira has been on the down ward trend even as this government in power have tried to treat the fundamentals as we call it wit a depletated reserve and low crude oil price;but the pple have constantly maintained that d currency was better managed under the last Pdp government that ave always defend the naira frm the external reserve. Now that we have cried up & they are doing the same thing to reduce the pressure on the naira, we are now demanding they treat the fundamentals. Nawa

stagger:
The aboki guys are smart. They know people will be desperate and so will offer to buy your dollars cheap. Many of them have been in the business for years so they know what will still happen.

The question is: what has really changed in the fundamentals of the Nigerian economy to justify a strengthening of the local currency? The answer is NOTHING.

What the CBN has simply done is to use some of the gain in the foreign reserves in the last 2 months to pump dollars into the market. Interventions are not new. They have been done by several central banks across the world. But the fact is: where the fundamentals have not changed, they hardly work.

The best the CBN can do is to keep pumping dollars to maintain the parallel market band at between 450 to 480/490. A country cannot spend the money it makes from exports to keep selling dollars to offset rising local demand.

The permanent solution is to reduce local demand for dollars by eliminating the main factors fuelling it. Ensure self-sufficiency in refining of products. This alone will cut demand of dollars for importation of petroleum products by 50%. Then the power sector reforms must be completely re-jigged so that by 2017/2018, we can double current generation and transmission. That way, local industries can start manufacturing again and this will reduce the need to import things like palm oil, furniture, shoes, clothing items, etc.

Make our universities and teaching hospitals centres of excellence. That way, we will not have a President spending four months in a London hospital at the country's expense, and millions of other Nigerians seeking treatment at Indian hospitals or schooling in UK, Malaysia and the US.

Until we do the needful as a country, we will remain in this cycle where the CBN has to pump dollars into the market to force down exchange rates. It is a temporary method which has an elastic limit. It cannot be sustained forever.

stagger:


I have a professional qualification in the area of technical analysis. This is part what I do for a living, bro...

Any country that has to keep relying on its central bank using scarce foreign exchange to shore up their currency is going nowhere but dancing around in circles.

Even a novice who knows laws of basic demand and supply can decode what is going on right now. The street sellers are capitalizing on the panic sales of those who have held their US dollars and are mopping it up at low prices. They are not selling US Dollars but will buy and only at very low prices. Once they have mopped up free dollars in the hands of the populace, a new round of dollar scarcity will arise. This scenario happened sometime in September/October.

No central bank will keep using a currency it does not have a legal mandate to print but has to earn, to keep defending its currency. The govt has to fund its budget with the dollar earnings from crude as well.

davidkingrichie:
As sad as this is, it is true. Well, we business peeps will find other means of making money aside forex. Buhari, pls come back o. I predicted that naira will hit 580 and I can't lose millions just like that.

stagger:
The aboki guys are smart. They know people will be desperate and so will offer to buy your dollars cheap. Many of them have been in the business for years so they know what will still happen.

The question is: what has really changed in the fundamentals of the Nigerian economy to justify a strengthening of the local currency? The answer is NOTHING.

What the CBN has simply done is to use some of the gain in the foreign reserves in the last 2 months to pump dollars into the market. Interventions are not new. They have been done by several central banks across the world. But the fact is: where the fundamentals have not changed, they hardly work.

The best the CBN can do is to keep pumping dollars to maintain the parallel market band at between 450 to 480/490. A country cannot spend the money it makes from exports to keep selling dollars to offset rising local demand.

The permanent solution is to reduce local demand for dollars by eliminating the main factors fuelling it. Ensure self-sufficiency in refining of products. This alone will cut demand of dollars for importation of petroleum products by 50%. Then the power sector reforms must be completely re-jigged so that by 2017/2018, we can double current generation and transmission. That way, local industries can start manufacturing again and this will reduce the need to import things like palm oil, furniture, shoes, clothing items, etc.

Make our universities and teaching hospitals centres of excellence. That way, we will not have a President spending four months in a London hospital at the country's expense, and millions of other Nigerians seeking treatment at Indian hospitals or schooling in UK, Malaysia and the US.

Until we do the needful as a country, we will remain in this cycle where the CBN has to pump dollars into the market to force down exchange rates. It is a temporary method which has an elastic limit. It cannot be sustained forever.

modath:



I want the best but I'm not convinced this won't come back to bite us in the ass!! Economic indices haven't changed, LCs aren't getting financing, manufacturers can't keep up with alternative power cost....

All this artificial 410 quotes na lie, Black marketers are just playing mind games, put a call to one, wants to buy @ 410-420 but won't sell less than 460, who is fooling who!!

February 2016, we experienced same thing!!!!!


Cc Stagger

Hisduchess:


why are you an advocate of Adam and Steve movement. are u stylishly telling us that u are ....

modath:



I want the best but I'm not convinced this won't come back to bite us in the ass!! Economic indices haven't changed, LCs aren't getting financing, manufacturers can't keep up with alternative power cost....

All this artificial 410 quotes na lie, Black marketers are just playing mind games, put a call to one, wants to buy @ 410-420 but won't sell less than 460, who is fooling who!!

February 2016, we experienced same thing!!!!!

stagger:
The aboki guys are smart. They know people will be desperate and so will offer to buy your dollars cheap. Many of them have been in the business for years so they know what will still happen.

The question is: what has really changed in the fundamentals of the Nigerian economy to justify a strengthening of the local currency? The answer is NOTHING.

What the CBN has simply done is to use some of the gain in the foreign reserves in the last 2 months to pump dollars into the market. Interventions are not new. They have been done by several central banks across the world. But the fact is: where the fundamentals have not changed, they hardly work.

The best the CBN can do is to keep pumping dollars to maintain the parallel market band at between 450 to 480/490. A country cannot spend the money it makes from exports to keep selling dollars to offset rising local demand.

The permanent solution is to reduce local demand for dollars by eliminating the main factors fuelling it. Ensure self-sufficiency in refining of products. This alone will cut demand of dollars for importation of petroleum products by 50%. Then the power sector reforms must be completely re-jigged so that by 2017/2018, we can double current generation and transmission. That way, local industries can start manufacturing again and this will reduce the need to import things like palm oil, furniture, shoes, clothing items, etc.

Make our universities and teaching hospitals centres of excellence. That way, we will not have a President spending four months in a London hospital at the country's expense, and millions of other Nigerians seeking treatment at Indian hospitals or schooling in UK, Malaysia and the US.

Until we do the needful as a country, we will remain in this cycle where the CBN has to pump dollars into the market to force down exchange rates. It is a temporary method which has an elastic limit. It cannot be sustained forever.

grandstar:



There are lots of question marks concerning your analysis.

First the abokis are not selling simply because they can't afford to sell at a loss. They must have bought at 480/490 so are unwilling to make hefty losses. They are hoping that what is happening is a fluke and things will go back to normal. Let's wait and see.

To some extent, the fundamentals are still the same but there has been some change.

The devaluation of the naira for payment of school fees and for some other things is a mild effort to ensure the exchange rate is market determined. This would have led to a drop in demand at the official level which might have had an impact on the black market.

Your solution is simply a reharsh of the same old thing i.e. to reduce demand for forex.

That has been part of the government's policies ands has been instrumental in leaving the economy in tatters.

You believe that reducing demand for forex is the solution but it really isn't.

How much forex do you expect to save when Dangote's refinery comes on board? Truth is no matter how big it is, the effect will not be long lasting.

You need to understand that Nigeria punches far below its weight. Brazil whose population is only marginally bigger than our exports $800b worth of goods and services.

This is greater than the Nigeria's GDP. Nigeria is punching far below it's weight. As the economy grows, new demand for forex will simply eat up any savings that was achieved.The economy will not stay the same size forever.

In 1999, a savings of $1b would have been something. Now, its noit much.

The smart money is on exports which your article was completely silent on. All countries that have become rich have achieved that through globalisation. Even prosperity was through the "export" of crude oil.

That is the only great thing about Dangote refinery. It has an excess 200,000 barrels a day for exports.

Government must introduce policies that will give exports the boost it needs mainly, the reduction in lending rates to single digits which will lead to a massive boost in investments in the real sector especially manufacturing. With low interest rates, companies can import world beating machinery which will make them competitive not only locally, but internationally as well. As they keep expanding, the local market will soon become cramped and they will be forced to export.

Also, other sources of forex such as Foriegn Direct Investment and portfolio investment should be encouraged. The senseless exchange rate regime which Buheri promoted has led to foriegn investors fleeing the country. In 2014, $21b was invested by foriegners. This collapsed to about $10b in 2015. No one will bring their money in at 197 when its 300 at the black market.

If the government concentrated massive efforts on generating forex, the reserves could easily rise by $10b within a year.

davidkingrichie:

That I am what? I am an advocate, not a member of such. What has this got to do with the Naira and my failed investment?