Will ₦900 Naira be equal to $1 Dollar in 2021? In this video, Finance & Tech Reviewer, Fisayo Fosudo shares a very detailed analysis about the new CBN policy regarding the ban on the sale of foreign exchange to the BDC (Bureau de Change) as well as how speculators think the dollar rate would be against the Naira.


https://www.youtube.com/watch?v=TvpZ6WNwVes

Why Did CBN Ban Sale of Forex?

During the Monetary Policy Committee Meeting that the CBN regularly has, the CBN governor announced on the 27th of July that they would stop selling forex, dollars especially, to the Bureau De Change Operators, and the reason cited was because of the unwholesome business practices by the BDCs that are putting a lot of pressure on the Naira. What does this mean for Nigerians and the economy? This is an attempt to look at both sides:

What is Going on?

In the year 2000, BDC operators in the country were only 74, in the range of the year 2010 and 2016, that number rose to 2,000 BDC operators and in 2018 to the 2021 year range, that number went up to 5,000 BDC operators in Nigeria. The thing is Nigeria has 2 markets, the Normal Import and Export Window market or the Bank rate and then the parallel or black market rate. Historically, the black market rate has always been higher, there was a time when Naira to the dollar was 22 on the normal rate and Naira to the dollar was 87 on the black market.

What have the BDCs been doing?

The CBN governor was receiving over 500 applications for BDCs every month and analysts claim many BDCs were flouting the rules of FX Guidelines by selling more than $5,000 per person or even getting more than one license to access the $20,000 (per license) weekly allocation from the CBN to the BDCs. A license requires that the BDCs deposit a minimum capitalization of 35 million Naira.

Previous CBN FX Sale Stop

The CBN has in fact discontinued selling of foreign exchange to the BDCs before. in 2016, Nigeria went into a recession because of the low oil prices. The CBN stopped selling dollars to BDCs partly because dollars from oil sales and foreign investors stopped coming in, the federal reserve also fell below the CBN’s target point. The dollar rate rose against the naira.

In January of 2016 and the CBN governor said that the bank has been selling at 197 to the BDCs, they have become greedy and are selling at 250 to ordinary Nigerian people. According to Nairametrics and a frame of reference, in January of 2016 when the CBN banned BDCs, the exchange rate was 268 per $1, in December of 2016, it went crazy to 495 per $1. We had a 46% currency devaluation and an 85% dollar gain against the naira. Basically, if you had $100 in January of 2016, it was 26,800 and by December it was 49,500 naira.

What will happen?

Just like the last time, the dollar rose against the Naira and subsequently stayed at 360 when the CBN was able to attract dollars from overseas with high interest from investors. This time around there’s a prediction that dollar will rise to 600 Naira per $1 or if we go by the 2016 number or 925 naira per $1 in December of 2021. I mean, It rose sharply to 525 from 500 per $1 just 1 day after the CBN made this recent 2021 announcement but it’s said that it would go even higher. At least in the short term. Fortunately, over the course of the days, it gained against the dollar and even went below 500 which is a major positive.

The CBN has taken many power moves and said that 1) Any Bank conniving with BDC now will be sanctioned. 2) They have in fact released 200 million dollars to banks so that people can buy directly, from their banks and 3) The CBN has even put out a letter stating that Bank should have teller points at their branches for the sale of FX to retail customers. Especially for people who want o request for Personal or Business Travel Allowance, School Fees, Medical Payment, Business transactions amongst others

The Aftermath - What does the Future Hold?

Analysts are looking at the fact that this move will drive the dollar rate up really high, at least in the short run and many people will take advantage of it. Do note that they have not banned BDCs or seized anyone’s licenses so people are still patronizing BDCs, however, the thing is that because of this shocking news, people might want to buy and hoard more in fear that the rate would go higher, which will make it go higher because there’s a lot of demand.

Many reputable analysts have advised that the CBN should just sell to the BDCs at that same very high rate of maybe 490 and force them to sell at 500 in the black market. Some also say Nigeria should just devalue the currency at 500 and let’s call it a day. This move might force BDCs to increase the price, causing the dollar to even rise further but again if it can be stabilized, the BDCs will lose almost 90% of their profits, the Nigerian people will gain.

The ultimate advice that can help Nigeria is that we find a way to make even more foreign exchange and not just demand for foreign exchange, it means more freelancers, higher oil prices even can help as it always helps, oil got us here anyway, we need to export way more and bring in more dollars so we can have the bargaining power, we also need to produce and consume locally, that is buying Nigerian and selling Nigerian.

Do you think Nigeria would export way more than we import? Would Nigerians suddenly start buying more locally produced goods and food and would inflation stop rising? Only time would tell, but I want to know your own thoughts about the situation in the comments below.

Mynd44
Lalasticlala

Mayorall can't believe what's going on right now!

They are banning evrything but dollar is still increasing

Just stop dollar inflow in the country

The thing is whether we like it or not, we re mostly to blame for the devaluation of the naira. As stated in the thread, alot of people will now hoard the dollar so as to gain something later in the year. So basically we re making the scarcity even hard on ourseves based on our selfish interest.

Alot of the BDC people use their license to go into business with yahoo boys who send them money that can be collected in later times.

The case of naira to dollar is similar to that of PMS sellers. We believe that it can not controlled but as we re now, we have forgotten the last time we had fuel scarcity in the nation. What needs to be worked on is how the govt can actually make the naira appreciate with this new development by stopping the BDC. I believe it will work someday.

God bless nigeria.

After glancing through everything, There is every tendency that dollar will still rise again.

For me the CBN should maintain their stand......no selling of forex to BDC's.......whatever we are going through now will be a short term headache but on the long run dollar will come down......BDC operators are damn too greedy and don't care about the economy of the country......but since they are mostly northerners can this administration maintain their stand?

Guys, abeg o

Shey no be Mr. Macaroni be that

'Oin you're doing well'

If not they look alike oo

Nice Fundamentals, but I don't think it would rise that high. A BDC agent told me today that those that buy and sell USD above NGN500 are frauds and that I should avoid them. They sell fake USD

Fisayo has paid you to promote his Friday money talks on nairaland abi

So what does this mean for oga Mompha? O.o

When we become self sufficient and not everything must be gotten from abroad


All this we stop

mtcheeww I swear I wanna leave dis country sef :-(

if he lik make he hit 10k..

Las Las we will get use to it like Zimbabwe currency...

As long as there is no constant electricity for businesses to thrive, we are just chasing shadows. Also the issue of corruption is another one.
Look at all the top economies in the world and show me which of them are struggling with electricity.
If you can’t produce at a competitive price, you can’t export. If you can’t export, you can’t earn dollars.
Even attracting enough foreign investment is difficult in an epileptic power environment.

Lack of adequate power supply and corruption is the root of Nigeria economic challenges.

All these cat and dog play by CBN and BDC is like putting bandage on an untreated sore.

KillIgbohoN0W:
Afonja H factor everywhere on this thread. Na wa

Oduduwa nation will be a nation of illiterates led by an ex-convict illiterate.

Nawa o, you this mad man!!! You don escape from Yabaleft again

I think the best way is for the CBN to impose a stricter sanctions on the BDCs and banks that are selling to make exorbitant profit...
The CBN should also formulate a policy that will eradicate the sale of dollars in the black market.. and only sale to the banks.

The video quality of this guy is actually top tier.

.

Noted

Cool - make my 1k USD become almost 1m while more lives slide into poverty.

everyone not earning in dollar go know how far especially the zombies

kramer:
So what does this mean for oga Mompha? O.o

Mumu don't think of how it will affect you be busy thinking of Mompha,.

The BDC's are criminals. But on another note this guy did nothing in the video.
If you are analysing something you must proffer solution after stating the problem. But unfortunately he didn't proffer any other feasible solution. Imagine BDC operator gaining profit of more than 100 naira for every single dollar. How can you regulate them to stop?
Money is the root of evil. And these people have enough to buy off any agency inspecting them.
I believe the solution is exactly what CBN did. Whoever needs dollar should go to his bank and use his account to buy at the official rate. It will be easier for CBN and financial regulators to know who buys what currency and what he aims to do with it.
Nobody will come every week claiming he needs dollars. So it can be controlled.
The problem is the criminals and corrupt government employees (civil/public) that will contunue to look for dollar to keep as security.
For now the BDCs' are claiming it is business as usual. But with time they will run out of foreign currency and that market will collapse. someone will think scarcity will make dollar to appreciate but look at this now anybody can access the dollar at the official rate from his personal bank. so who will leave official rate and go and pay 100+ more naira per single dollar from black market?
Now people will think someone with physical dollar will not go to bank to sell his $ because it is more at the black market. but the same black market will crash because if they cant sell because everyone is buying from bank. so if they cant sell definitely they will not buy. or at least they will only buy below the official bank rate. so this will force the customer to go to the bank.
Imagine 5000 BDC in 37 states. that is more than 135 BDC company in each state in Nigeria�. something is definitely wrong

directonpc:
Cool - make my 1k USD become almost 1m while more lives slide into poverty.

You'll be buying things at inflated prices too. You're inviting hyperinflation for temporary gains.

very good analysis

AnonPoet:
Will ₦900 Naira be equal to $1 Dollar in 2021? In this video, Finance & Tech Reviewer, Fisayo Fosudo shares a very detailed analysis about the new CBN policy regarding the ban on the sale of foreign exchange to the BDC (Bureau de Change) as well as how speculators think the dollar rate would be against the Naira.


https://www.youtube.com/watch?v=TvpZ6WNwVes

Why Did CBN Ban Sale of Forex?

During the Monetary Policy Committee Meeting that the CBN regularly has, the CBN governor announced on the 27th of July that they would stop selling forex, dollars especially, to the Bureau De Change Operators, and the reason cited was because of the unwholesome business practices by the BDCs that are putting a lot of pressure on the Naira. What does this mean for Nigerians and the economy? This is an attempt to look at both sides:

What is Going on?

In the year 2000, BDC operators in the country were only 74, in the range of the year 2010 and 2016, that number rose to 2,000 BDC operators and in 2018 to the 2021 year range, that number went up to 5,000 BDC operators in Nigeria. The thing is Nigeria has 2 markets, the Normal Import and Export Window market or the Bank rate and then the parallel or black market rate. Historically, the black market rate has always been higher, there was a time when Naira to the dollar was 22 on the normal rate and Naira to the dollar was 87 on the black market.

What have the BDCs been doing?

The CBN governor was receiving over 500 applications for BDCs every month and analysts claim many BDCs were flouting the rules of FX Guidelines by selling more than $5,000 per person or even getting more than one license to access the $20,000 (per license) weekly allocation from the CBN to the BDCs. A license requires that the BDCs deposit a minimum capitalization of 35 million Naira.

Previous CBN FX Sale Stop

The CBN has in fact discontinued selling of foreign exchange to the BDCs before. in 2016, Nigeria went into a recession because of the low oil prices. The CBN stopped selling dollars to BDCs partly because dollars from oil sales and foreign investors stopped coming in, the federal reserve also fell below the CBN’s target point. The dollar rate rose against the naira.

In January of 2016 and the CBN governor said that the bank has been selling at 197 to the BDCs, they have become greedy and are selling at 250 to ordinary Nigerian people. According to Nairametrics and a frame of reference, in January of 2016 when the CBN banned BDCs, the exchange rate was 268 per $1, in December of 2016, it went crazy to 495 per $1. We had a 46% currency devaluation and an 85% dollar gain against the naira. Basically, if you had $100 in January of 2016, it was 26,800 and by December it was 49,500 naira.

What will happen?

Just like the last time, the dollar rose against the Naira and subsequently stayed at 360 when the CBN was able to attract dollars from overseas with high interest from investors. This time around there’s a prediction that dollar will rise to 600 Naira per $1 or if we go by the 2016 number or 925 naira per $1 in December of 2021. I mean, It rose sharply to 525 from 500 per $1 just 1 day after the CBN made this recent 2021 announcement but it’s said that it would go even higher. At least in the short term. Fortunately, over the course of the days, it gained against the dollar and even went below 500 which is a major positive.

The CBN has taken many power moves and said that 1) Any Bank conniving with BDC now will be sanctioned. 2) They have in fact released 200 million dollars to banks so that people can buy directly, from their banks and 3) The CBN has even put out a letter stating that Bank should have teller points at their branches for the sale of FX to retail customers. Especially for people who want o request for Personal or Business Travel Allowance, School Fees, Medical Payment, Business transactions amongst others

The Aftermath - What does the Future Hold?

Analysts are looking at the fact that this move will drive the dollar rate up really high, at least in the short run and many people will take advantage of it. Do note that they have not banned BDCs or seized anyone’s licenses so people are still patronizing BDCs, however, the thing is that because of this shocking news, people might want to buy and hoard more in fear that the rate would go higher, which will make it go higher because there’s a lot of demand.

Many reputable analysts have advised that the CBN should just sell to the BDCs at that same very high rate of maybe 490 and force them to sell at 500 in the black market. Some also say Nigeria should just devalue the currency at 500 and let’s call it a day. This move might force BDCs to increase the price, causing the dollar to even rise further but again if it can be stabilized, the BDCs will lose almost 90% of their profits, the Nigerian people will gain.

The ultimate advice that can help Nigeria is that we find a way to make even more foreign exchange and not just demand for foreign exchange, it means more freelancers, higher oil prices even can help as it always helps, oil got us here anyway, we need to export way more and bring in more dollars so we can have the bargaining power, we also need to produce and consume locally, that is buying Nigerian and selling Nigerian.

Do you think Nigeria would export way more than we import? Would Nigerians suddenly start buying more locally produced goods and food and would inflation stop rising? Only time would tell, but I want to know your own thoughts about the situation in the comments below.

You've not said anything at all. You only brought more confusion.

samsard:
You'll be buying things at inflated prices too. You're inviting hyperinflation for temporary gains.

Sarcasm bro. How will I be happy about increasing poverty

Those that earn in USD should gather here

lessonotes:
Nice Fundamentals, but I don't think it would rise that high. A BDC agent told me today that those that buy and sell USD above NGN500 are frauds and that I should avoid them. They sell fake USD

Can u link me up with that bdc operator ??