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Re: Can CBN Sustain The Black Market Onslaught? by knowyaself2(m): 6:17pm On Mar 05, 2017 |
plaetton: The govt is just trying to remove artificial dollar scarcity, created by the activities of currency speculators, which I think is appropriate and timely. I think it's wrong to assume their action will create unsustainable artificial value of naira. Their short term policy, as I see it, is to create a level ground for market forces to interact and set the real market - determined rates for the currencies in play, while their long term policy should be to curb demand for hard currencies by improving per capita productivity and non-oil exports. 1 Like |
Re: Can CBN Sustain The Black Market Onslaught? by grandstar(m): 6:43pm On Mar 05, 2017 |
Simply increasing supply of dollars to the market is not the solution. It will help but the foundation of the current problem needs to be attacked. The currency needs to float, that is, determined by the forces of demand and supply. As Sanusi said, the differential between the black market and official rates must not be more than 3%. Presently, it's still more than 40% encouraging massive round tripping and causing severe shortages of forex. If the currency was floated, the Naira will depreciate at the official market reducing demand there and allowing a merging of the 2 rates. I suspect the price will hover around 360-400 eventually if coupled with a full scale deregulation of petroleum prices which will help moderate forex demand for petroleum imports. With a floating currency, supply of forex from non-government sources will increase greatly and this is what the country desperately needs now 2 Likes |
Re: Can CBN Sustain The Black Market Onslaught? by udoh2k: 8:43pm On Mar 05, 2017 |
Let's do small math for lay man understanding daily prod= 2 million barrel per day cost of oil = 50$ Total per day= 2 x 50 = $100m Per week (5 working day) = $500m So CBN rolling out 530m per week is not sustainable. EXCEPT IF DEM DEY SELL CRUDE 7 DAYS A WEEK OR PRODUCTION INCREASE OR CRUDE PRICE INCREASE 2 Likes |
Re: Can CBN Sustain The Black Market Onslaught? by soulfood(m): 9:11pm On Mar 05, 2017 |
Re: Can CBN Sustain The Black Market Onslaught? by plaetton: 9:41pm On Mar 05, 2017 |
knowyaself2:My dear friend, you speak as if you don't live in Nigeri. Since 1984, ironically, under Buhari, the Forex black market came to life as bona fide price discovery mechanism for the exchange rate of the Naira, it has always always been the real market for the real value of the Naira from a little above parity with the dollar to where it currently is today. No amout of monetary voodooism or shenanigans will allow the Naira to defy gravity for any extended period of time. Therefore, if you think that the government or the CBN has found a magic wand to give the Naira( backed by a generator economy) a new found and undeserved value, then you certainly setting yourself up for big disappointments in a very short time. 1 Like 1 Share |
Re: Can CBN Sustain The Black Market Onslaught? by oxytech: 3:18pm On Apr 24, 2017 |
Truth234: Funny you ..... whats the difference?? Money in my wallet, money in the Bank?.... what counts on this occasion is; there is an outflow! 1 Like |
Re: Can CBN Sustain The Black Market Onslaught? by oxytech: 3:24pm On Apr 24, 2017 |
zomoears: Subsidy has "sneekingly" been returned...... Oil importers rate is 285. Official is 305 1 Like |
Re: Can CBN Sustain The Black Market Onslaught? by oxytech: 4:00pm On Apr 24, 2017 |
kjhova: Curiously, in 1999 when Obasanjo came in, Oil was $17, Reserve was $5.4billion, rate was N92! You know why? Sentiments (shortlived "goodwill", plays the primary key role in your exchange rate (the demand or not for your Naira!). Buhari messed up, by sending a signal that he was statist, non-market oriented and fx controls freak. Once sentiments is negative, others follow and hit you hard: balance of payments to inflation, to interest rate, to Debt, to stock market, to speculation....in that order! ONLY Solution: go back and correct the sentiments, or...."change" |
Re: Can CBN Sustain The Black Market Onslaught? by oxytech: 4:11pm On Apr 24, 2017 |
porozhniy: We are all screwed already....so do not wait till 2018! When Dangote comes due to cost of funds, lack of competition and protectionism; import substitution eventual does not improve welfare. Like rice and tomato, Govt will loose duty etc and you will still pay 185 per litre or more! |
Re: Can CBN Sustain The Black Market Onslaught? by oxytech: 4:19pm On Apr 24, 2017 |
ISTANDWITHBUHAR: As factories sell more, produce more, they will demand for more $. Retail importers too will re-stock more,, as better sales due to good margins, at lessened cost. More kids will head abroad to school, as its now affordable. Result is: higher dollar demand, at flat supply!!....so where do you think you are going with this? ........dollar rise! It a 2019 re-election policy; the pain awaits, as its just being delayed!!! |
Re: Can CBN Sustain The Black Market Onslaught? by 989900: 4:27pm On Apr 24, 2017 |
plaetton: |
Re: Can CBN Sustain The Black Market Onslaught? by 989900: 4:28pm On Apr 24, 2017 |
sholatech: |
Re: Can CBN Sustain The Black Market Onslaught? by kjhova(m): 4:31pm On Apr 24, 2017 |
oxytech: Your suggested cause of the FX rate increase and inflation is reasonable however it will be worse than simplistic to assume that this alone was the reason for the recession. Uncertainty about fiscal direction can impact on economic growth rate but this is often marginal and short termed. The factors of a depleted foreign reserves, falling oil prices, debilitating war, militant disruption of oil production, looting of the commonwealth by government officials etc are more likely to send an economy into downward spiral faster than sentimental views. |
Re: Can CBN Sustain The Black Market Onslaught? by oxytech: 4:45pm On Apr 24, 2017 |
ISTANDWITHBUHAR: Really? So how do you do capital projects and develop your infra-structure, if all has been spent to subsidize the dollar. Of Nigeria's 5 Trillion forecasted budget revenue (not yet met); 60% is on Recurrent expenditure, 32% on Debt servicing. Left 8% (N400billion) peanuts is left!..... Wake up o!! |
Re: Can CBN Sustain The Black Market Onslaught? by oxytech: 5:34pm On Apr 24, 2017 |
kjhova: Truthfully, Buhari made an already very bad situation he inherited, worse...... When Buhari took office as compared to 1999 (irrespective of the leader then), all the following you mentioned were present (depleted foreign reserves, falling oil prices, militant disruption of oil production, looting of the commonwealth by government officials etc). NOT Short term uncertainty about fiscal direction can impact on economic growth rate, but this is often NOT marginal, and NOT short termed. Buhari LONG TERM uncertainty, and flip flops are legendary! Coming back; when the subtly SENTIMENTS (a view or opinion that is held or expressed on Market economy, ETC ) kick in: "Hot money" (FPI etc) first flies out very very quickly; if not quickly stemmed fast, then FDI's follow slowly. Then international ratings are lowered..... your balance of payments gets hit. You end up with a current account deficit, which has to be financed with a capital account surplus, from borrowing! This would hit inflation and interest rates simultaneously. If you now add unguarded threats to militants, who increase oil disruption, you then get a full blown economic crisis, as your current deficit is larger. Getting out of a mathematical Recession is not even the issue as; its just a % comparison between GDP within 2 periods, which militant oil disruption is responsible for the less export component. The problem now looks like STAGFLATION!!!............. |
Re: Can CBN Sustain The Black Market Onslaught? by chloride6: 5:51pm On Apr 24, 2017 |
The chances are slim given that this thing is heavily hinged on the state of things in the Niger Delta. There will be unrest in Niger Delta someday, that is for certain. We would be foo.lish to believe the Niger Delta problem is gone. The question now becomes, will we have stored enough by then? Oil above $50 has come to stay, the whole world is just awaiting the gradual move to $65 in the next few years. Besides, at 375 a dollar, the rate of accumulation is a little slow. Once market prices begin to drop, the economy will start to pick up and there will be increased demand and then the accumulation will be even slower or even stop as supply will equal demand. One bomb from dem guys We are back to square one. let's hope for the best. |
Re: Can CBN Sustain The Black Market Onslaught? by chloride6: 5:56pm On Apr 24, 2017 |
udoh2k: lol..... oil is produced throughout the year. However, even that 2 million barrel doesn't even belong entirely to us. We only get about 1.3 million barrels revenue. you didn't not, however, factor in foreign remittances which is a lot (about $25 billion a year) |
Re: Can CBN Sustain The Black Market Onslaught? by kjhova(m): 6:01pm On Apr 24, 2017 |
oxytech: Well, at this stage we digress from the original post. Moreso, we are now only dealing in speculative opinions and can only go on and on. We will hopefully have this discussion on another forum. |
Re: Can CBN Sustain The Black Market Onslaught? by ISTANDWITHBUHAR: 7:29pm On Apr 24, 2017 |
oxytech: So you mean capital project are executed and paid for in dollars? I doubt that.. Beside we seel our stuff in dollars and bring the dollars into the country. As dollars is not our official currency, it will be sell to people that need it for personal use.. |
Re: Can CBN Sustain The Black Market Onslaught? by oxytech: 10:59pm On Apr 24, 2017 |
ISTANDWITHBUHAR: As a matter of fact, the currency used is not important in the math calculation. As long as you stick to only one currency, the math is the same. Moreover, there is no money left, just 400million NAIRA. Also, we have a deficit of 2.36Trillion ($7 billion) we intend to borrow; and we have only secured $1.5 billion..... |
Re: Can CBN Sustain The Black Market Onslaught? by oxytech: 11:09pm On Apr 24, 2017 |
kjhova: You are very right....Economics is not a perfect science, just "best" speculation, at the end of the day. CBN can "sustain", if oil production is stable, and oil price is mid range, but this could lead to a very big WELFARE loss, overtime. This WELFARE loss should be our main concern, not just sustaining the numeric rates, by borrowing. If no other significant source of dollar supply (nobody wants to come because of controls, etc), larger borrowing will be needed as the current account deficit grows larger. (Also, we wont get a "$139 oil price to balance the budget deficit"-Fitch). Adding more borrowings to our debt servicing/revenue ratio of over 32%; means we can not sustain servicing any more additional debt. Soon, only IMF will be willing to lend to us at a CONDITION-restructure. This could mean: low growth, high inflation, or back to "SAP"; both leading to a Welfare loss for you and I, AFTER 2019 . I compared most of the key economic indicators of Nigeria, most top countries and fast growing/rated African countries; and it was surprising to see that Nigeria is at shoulders, with mostly similar or better fundamentals. Even the toothpick, importing/exporting, losses to corruption, etc, propaganda (am pro Buhari) were within range, and better than most countries. The only conclusion I reached was that: our new, unstable "MARKET ECONOMY" is not well developed enough, as the key BASELINE principle of demand-supply equilibrium is distorted, so most further referencing from such false baseline will be distorted. I would, posit that DEVELOPING nation especially with non floating economies should treat economic indicators as nominal, and add a "developing factor" for real values. Investors view us in that light anyway, so we do not need to keep fooling ourselves with good indicators, and quickly start making harder decisions, than waiting in vain. Most developed economies can attract a lot of capital flows to buy securities. However, a developing economy may be more vulnerable because investors may be quicker to fear an economic downturn and remove their capital, EVEN THOUGH with similar negative economic indicators - risk? |
Re: Can CBN Sustain The Black Market Onslaught? by oxytech: 11:31pm On Apr 24, 2017 |
plaetton: Imagine, speculators! Well put....You go beta school ....your head dey work well, well o!!!....Kudos!! |
Re: Can CBN Sustain The Black Market Onslaught? by ISTANDWITHBUHAR: 6:17am On Apr 25, 2017 |
oxytech: I don't care about how you see it or if you are praying for all this to fail, All i care about is it's gonna be sustain and your prayer for the Govt to fail won't work.. |
Re: Can CBN Sustain The Black Market Onslaught? by oxytech: 12:28pm On Apr 25, 2017 |
ISTANDWITHBUHAR: "I don't care...! prayer!"....its just arithmetric, not about my desires Am pro Buhari too, but silence never brings correction.... Well.... (Correction...N0.4T left=N400billion) |
Re: Can CBN Sustain The Black Market Onslaught? by oxytech: 2:09am On Apr 26, 2017 |
Truth234: Above has 56 LIKES!!??..... Una go kill me o, as I comment thus: FIRSTLY: 2017 Budgeted Oil revenue is $6.5B (N2Trillion) = 20% of (2.2mbd x 365 x $42.5 x 305)-ONLY for pro-rata purpose below. Todays Oil production is 1.3mbd and falling; NOT 2.2mbd or whatever propaganda, you are hearing. 2017 forecasted production is 1.5mbd at $53. Forecasted 2017 Oil revenue is $5.8B (N1.7Trillion) using above pro-rata of 20% of (1.5mbd x 365 x $53 x 305). So as it stands, there is already a $0.7B forecasted shortfall in dollar revenue. SECONDLY: All Nigeria's foreign earnings (that $6.5B plus the others shared to States & Local govt in Dollar form) are already inputed into your international balance of payment ($export-$import) calculation, and its shown that you have a Current account deficit of -3.8% of GDP, which would need to be eventually financed by FX reserve draw-downs, or borrowing. So, you do NOT really have this dollar free at hand to give the forex market!! With a projected 18% jump in import component due to dollar liqudity, the worse the Current account deficit, so larger FX reserve draw-downs or fx borrowings needed. THIRDLY: Because of only 1.5mbd production, lower company tax revenue, custom duty, etc, the N5Trillion total Budget revenue will not materialise. The projected budget deficit of -2.14% will get larger; so more borrowings again At the end of the day, it will boil down to either devalue now and loose 2019 election; or borrow to win 2019 and face IMF plus worse devaluation later. Sadly as Nigerians, their choice is obvious........!! 1 Like |
Re: Can CBN Sustain The Black Market Onslaught? by oxytech: 3:34pm On May 16, 2017 |
oxytech: Propaganda, as earlier mentioned above: The norm is for countries to under quote their true production, so they can sell backdoor, above OPEC assigned quota. Its ONLY Nigeria that does the reverse!!!!!! That external reserve, new budget and fx supply to black market are all in serious trouble o. |
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