LoveGifted:
Please 1 Dollar is now 730 Naira.

I am not a good economist or political analyst but I need a good person to help me explain what makes dollar rise in Nigeria.

I can't really understand what's happening.

Dollar racket and looting

Lastbornbuns:
It's majorly because of the political and economic situation in Nigeria. Insecurity has a lot to do with it. Foreign investors are trying to recoup their losses. The country is very unstable. Plus the mad policies CBN keeps bringing out. I honestly don't know where that Governor got his own econ degree from. Demand for dollar keeps increasing and there's no supply of it.

They've successfully emptied Excess Crude account.. something that could've been used to help the naira

You're smart

LoveGifted:
Please 1 Dollar is now 730 Naira.

I am not a good economist or political analyst but I need a good person to help me explain what makes dollar rise in Nigeria.

I can't really understand what's happening.

It was human Beans that made Dollar Rice. That's why i am still Salt of words.

Because your president is drinking kunu and waiting for the end of his vacation in Aso Rock, not managing the economy.

DroppingLiquid:


I think you guys are underestimating arbitrage. Official rate is 410, which only banks and few people can get, while black market is 700. What stops the banks from continuously exploiting this for profit? They can continue to buy and flip to Black market sellers at 650, making over #300 in profit. They've just printed 300 naira out of thin air. They can do this continuously without stopping, causing inflation of naira because they're printing money (naira) from thin air

Also, it doesn't help that CBN govenor threatened people that are buying dollar. Now everyone is panic buying dollar to keep, inflating the price of the dollar against the naira.

Banks don't sell dollars to black markets. That's a big financial crime.

The USD banks keep are mainly for paying their customers who withdraw in dollars and give to travellers under very stringent conditions.

Why many travellers buy USD from black market is that getting them with naira at official exchange rate from banks comes with tough terms and conditions - something that most of them cannot meet.

SmartPolician:


Banks don't sell dollars to black markets. That's a big financial crime.

Banks commit financial crime all the time. In a country like Nigeria, it's nothing for them.

DroppingLiquid:


Banks commit financial crime all the time. In a country like Nigeria, it's nothing for them.

Me I tire o. What will happen if they sell to black markets? Im go carry cane go flog Emefiele? [center][/center]

Nigeria is bankrupt!

[img]https://giffiles./216/216347.gif[/img]

More reason I'll study economics

Lastbornbuns:
It's majorly because of the political and economic situation in Nigeria. Insecurity has a lot to do with it. Foreign investors are trying to recoup their losses. The country is very unstable. Plus the mad policies CBN keeps bringing out. I honestly don't know where that Governor got his own econ degree from. Demand for dollar keeps increasing and there's no supply of it.

They've successfully emptied Excess Crude account.. something that could've been used to help the naira

you mean successfully looted

In short, the country is not productive. We need to be productive to earn more USD from various ventures but as of now, our main source is crude (export and sell in dollar, import in dollar, convert to naira, sell at a lower price- the govt off takes the balance of the USD as subsidy).

Non working refineries to reduce the cost of refining and importation, lack of diversified sources of revenue, in productive population (in real terms).

DroppingLiquid:


Banks commit financial crime all the time. In a country like Nigeria, it's nothing for them.

He means ceteris paribus.

Its a rigged system.

Light78:
In a sane country, everyone would depart from APC.
I wonder if the leaders and delegates are charmed.

Leaders and delegates are on their payroll… in 2018 someone got 70k monthly from a southwestern state govt. for doing nothing, yet they couldn’t pay real workers the agreed 30k minimum wage

DroppingLiquid:


I think you guys are underestimating arbitrage. Official rate is 410, which only banks and few people can get, while black market is 700. What stops the banks from continuously exploiting this for profit? They can continue to buy and flip to Black market sellers at 650, making over #300 in profit. They've just printed 300 naira out of thin air. They can do this continuously without stopping, causing inflation of naira because they're printing money (naira) from thin air

Also, it doesn't help that CBN govenor threatened people that are buying dollar. Now everyone is panic buying dollar to keep, inflating the price of the dollar against the naira.

This is exactly the number one problem of the naira, stop all road side BdC and watch the Naira begin to stabilize.

I got nauseous the other day when I had to pay #618/$, I complained bitterly for days to whoever cared or didn’t care to listen. I couldn’t understand why I saw with my own eyes people depositing thousands of dollars on the same counter I was getting my dollar card from but I still needed to buy from BDC guys to fund same bank card. If anything at all every top banker and their handlers should be jailed for life for putting the lives of over 250million Nigerians in reverse all these years.

The current rulership is wickedly clueless and useless, sad thing is they know it. They just dgaf!

I still don’t see elections holding come 2023, you need stability to organize elections.

SmartPolician:


Banks don't sell dollars to black markets. That's a big financial crime.

The USD banks keep are mainly for paying their customers who withdraw in dollars and give to travellers under very stringent conditions.

Why many travellers buy USD from black market is that getting them with naira at official exchange rate from banks comes with tough terms and conditions - something that most of them cannot meet.

Seriously?!

Low export
Huge import
Constant withdrawal from reserves
Political instabilities
Economic meltdown
Huge debt servicing
Wars. And much more. Nigeria seems to be facing all of these. Courtesy Gen Buhari who’s a general in all.

Lastly, Nigerians are chasing dollars up and down and keeping it in their dom accounts because of inflations. This is why emefiele talked about arresting people buying dollars in the black market.
All of them are confused they should just resign.

famouscargo4u:


He only asked for indices that leads to depreciation of Naira.

Buhari govt is running crazy financial policies. Let me tell you that simp cbn gov. is only taking orders from the cabals . He’s no mind of his own

Venezuela comes to mind.

All state owned projects are in shabbles, ruins or abandoned halfway during construction. we export nothing and depend on oil.
Imaging working all your life to save 2 million only for inflation to hit and you can't buy ordinary bread for 2 milla. That's the case of Venezuela today..you need a million plus just to get a cup of coffee.

Import tractors, lots of it and start tiling land for free and giving them to people to cultivate, they pay tax after harvest. Give loans to farmers and fix electricity to attract foreign investors.
Also terrorism is one of the reason no one wants to invest in Nigeria.

LoveGifted:
Please 1 Dollar is now 730 Naira.

I am not a good economist or political analyst but I need a good person to help me explain what makes dollar rise in Nigeria.

I can't really understand what's happening.

Your QUESTION should be....
What makes NAIRA depreciate?
Dollar dey where ee dey, na NAIRA dey run leave am naaaa.

PharoahIII:
Scarcity. The scarcer a commodity, the higher its price.

What is scarcer?

okeysoninv:
CBN stopped funding importers but has excess money to fund study abroad rich people , medical tourism in the turn of $10b. why won't naira crash. let CBN fund importers with excess of 10b dollars yearly let's see if naira won't come down.

While CBN should stop funding frivolous stuff, releasing dollars to fund imports is a nice way of wasting dollars as well.

LoveGifted:
Please 1 Dollar is now 730 Naira.

I am not a good economist or political analyst but I need a good person to help me explain what makes dollar rise in Nigeria.

I can't really understand what's happening.

the interest rate is being raised to cushion the effect of inflation in America. So currencies are becoming weaker against the dollar. Dollar brings poverty.

This is going to be a long write up, but you’ll only understand if you patiently read & assimilate.

Simple secondary school economics teaches that the price of a commodity is determined by the demand and supply for that commodity. If the demand for a product, like sugar or garri, increases, the price will rise. Consider, for example, that in a town that used to have 10 (ten) bread bakeries, 9 (nine) suddenly close their shops and only one bakery is left. What would happen to the price of bread the next morning? It will rise because the supply of bread has fallen.

So, in general, just like the price of cows or cars, the price of the US Dollar in Nigeria is determined by the quantity of US Dollars that flows into the country as well as the quantity of US Dollars demanded by Nigerians.


Using this simple principle of demand and supply, let us now look at how the exchange rate (that is, the price of US Dollars) has fared in the last couple of years. The simple truth is that the exchange rate in Nigeria has risen/depreciated because it is suffering from two simultaneous effects: the supply of US Dollars is falling at the same time when the demand of US Dollars is rising.

People always refer to the 70s and 80s when the Naira was “stronger” than the US Dollar, or at least, were at par (the same value). But the real question to ask is: what was the demand and supply of US Dollar at that time, and what is it today?

Let us look at the demand first. In the 1980s and 1990s, the number of Nigerians studying abroad (for which US Dollars is needed from here for their upkeep) was negligible. Yet, according to data from the UNESCO’s Institute of Statistics, the number of Nigerian students abroad increased from less than 15,000 in 1998 to over 71,000 in 2015. By 2018, this number had risen to 96,702 students, according to the World Bank.


In the 1980s and 1990s, you would search hard before you can find parents who sent their children to primary and secondary schools abroad. Today, a sizeable amount of the foreign exchange request Nigerian banks receive for school fees are for primary and secondary school education, some of which are for neighbouring African countries. In light of the above, it is no wonder that foreign education has cost the country a whopping sum of US$28.65 billion between 2010 and 2020, according to the CBN’s publicly available Balance of Payments Statistics. If this amount were not sent abroad but was part of the CBN’s Foreign Exchange Reserves, the Naira would be much stronger today.
How about healthcare?

No one reading this would deny not ever knowing anyone who has travelled abroad in the last few years specifically to receive medical care. According to the Nigerian Sovereign Investment Authority (NSIA), Nigerians spend over US$1 billion annually on medical treatment abroad (championed by the president & his party’s current presidential candidate). This fact is corroborated by a review of the Central Bank’s balance of payment data, which indicate that Nigerians have spent US$11.01 billion on healthcare-related services over the past 10 years.

Over the last 10 years, therefore, foreign exchange demand specifically for education and healthcare has cost the country almost US$40 billion. As you may know, this amount is equivalent to the total current foreign exchange reserves of the CBN. If we were able to avoid a significant portion of this demand, the Naira would be much stronger today.
According to Nairametrics, a leading Nigerian online newspaper, Nigeria and its corporates spent a sum of US$55 billion on foreign expatriates for business, professional, and technical services in the last 10 years. Similarly, Personal Travel Allowances gulped a total of US$58.7 billion over the same period. In fact, in the 9-month period between January and September 2019, the CBN sold US$9.01 billion to Nigerians for personal foreign travels.


Still on demand for US Dollars, in 1980, Nigeria’s total imports (for which we need dollars to pay our suppliers) was US$16.65 billion per annum. By 2014, our annual import bill had risen astronomically to US$67.05 billion, though it has gradually fallen to US$54.71 billion as of last year. Similarly, in 1980, food imports cost us US$2.63 billion. We were mostly eating what we produced here in Nigeria. But as of 2011, food imports had skyrocketed to US$18.91 billion, though it has fallen to US$14.84 billion as of 2019.
In 1980, over 75 percent of the cars we drove on our roads were made here by either Volkswagen in Lagos, Peugeot in Kaduna, or some other automobile companies. Today, over 99 percent of the cars we drive are imported (for which we need dollars to make payment). In 1980, most of the clothes we wore were from Nigerian textile mills in Funtua, Asaba, Kano, Lagos, or other numerous towns and cities. Today, almost all the clothes we wear are from imported fabrics.


With this level of demand on education, healthcare, professional services, personal travel, and the likes, the exchange rate will definitely be under constant pressure to rise, particularly when the Central Bank does neither print US Dollars nor exports Nigeria’s crude oil. Under these circumstances, the price of US Dollars will continue to rise, especially if its supply either remains constant or worse still, falls.

But that takes me to the supply side of US Dollars in Nigeria. As a respected colleague once remarked, an economy must “earn” US Dollars for the supply to rise. The productive base of the economy must be strong in order to produce goods and/or services that the rest of the world is willing to pay for in US Dollars. In the case of Nigeria, we can do so either by oil exports or non-oil exports.

While we have seen from the analysis above that demand for US Dollars has risen tremendously over the past decades, its supply has unfortunately fallen sharply. Recall that in 1980, our import bill was US$16.65 billion? That same year, we earned US$25.97 billion in exports, leaving us a “savings” of US$9.32 billion. So, in 1980, we were able to meet all the demand for US Dollars from our supply of US Dollars and still had over US$9 billion to spare. In this instance, the exchange rate (the price of the US Dollar) will not rise because, like any commodity, its supply is more than the demand.
By 1996, we earned US$59.83 billion from our exports. That is, approximately US$59.83 billion was “supplied” into the Nigerian economy in 1996. Conversely, our import bill (the demand for US Dollars) for that year was US$25.71 billion, leaving us a surplus supply of over US$34 billion. Indeed, from 2003—2013, we enjoyed a surplus of US$331.73 billion into the economy. During the same period, oil exports alone accounted for over US$798 billion. Of course, with such “excess” dollars, the exchange rate would be stable, and the Naira would be “strong”.


In the last 12 years unfortunately, oil exports, which accounts for over 90 percent of our foreign exchange supply/earnings, have fallen from US$93.89 billion in 2011 to US$31.4 billion in 2020.

This drastic decline, including the recent decimation of our Excess Crude Account by people you were expressly warned not to vote into power amongst other reasons, implies that the demand for US Dollars has exceeded its supply by about UD$18.45 billion over the last 7 years, that is the price of your blind tribalism over competence! But if you wan change your NAIRA to dollars I go run am for you sharpaly. Money nor get tribe or religion!!

twentyfivekobo:


While CBN should stop funding frivolous stuff, releasing dollars to fund imports is a nice way of wasting dollars as well.

when the inflation comes bitting don't cry. There is no country on Earth tha doesn't import one thing or the other

okeysoninv:
when the inflation comes bitting don't cry. There is no country on Earth tha doesn't import one thing or the other

True,but it would be better if we were among the nation's people were importing manufactured stuff from

twentyfivekobo:


True,but it would be better if we were among the nation's people were importing manufactured stuff from

see it's poor handling of economy that's affecting Nigeria.. Nigeria exports more than imports in our balance of trade. this is what you people doesn't know. most of exported earnings are not being repatriated , this is where the problem lies

okeysoninv:
see it's poor handling of economy that's affecting Nigeria.. Nigeria exports more than imports in our balance of trade. this is what you people doesn't know. most of exported earnings are not being repatriated , this is where the problem lies

What we majorly export is oil...and the oil price is far far too low most of the time to sustain us, plus corruption and subsidy are increasingly biting into the money well well.

Every African country, except the North African ones, and South africa are in the same position.

To stay afloat, we all take loans.

twentyfivekobo:


What we majorly export is oil...and the oil price is far far too low most of the time to sustain us, plus corruption and subsidy are increasingly biting into the money well well.

Every African country, except the North African ones, and South africa are in the same position.

To stay afloat, we all take loans.

no we are now major gas exporting nation. When combined with oil you are getting more money than import. We then include solid minerals, agriculture and finish products..then govt bonds and other sources of revenue. Finally our diaspora remittance is one of the highest in Africa. Nigeria has no logic of having scarcity of dollars.
All Africa currencies are faring better than naira..

okeysoninv:
no we are now major gas exporting nation. When combined with oil you are getting more money than import. We then include solid minerals, agriculture and finish products..then govt bonds and other sources of revenue. Finally our diaspora remittance is one of the highest in Africa. Nigeria has no logic of having scarcity of dollars.
All Africa currencies are faring better than naira..

Either way we don't control the prices of gas, oil and minerals or agric products. Which is why I believe that any serious Nigerian leader and even we Nigerians have to work hard to use all those natural resources to make goods and services the world needs.

Selling gas whose price falls tomorrow below sustenance level is not the way forward. Same.for other raw.materiel

twentyfivekobo:


Either way we don't control the prices of gas, oil and minerals or agric products. Which is why I believe that any serious Nigerian leader and even we Nigerians have to work hard to use all those natural resources to make goods and services the world needs.

Selling gas whose price falls tomorrow below sustenance level is not the way forward. Same.for other raw.materiel

Nigeria sells more than 38b cubic meters of gas every year at the rate of 2-3.7usd . You can go verify.
1.3 to 1.4bd a barrel is 80- 108usd . Go and verify. Cumulate it , you will get nothing less than $150b annually.

Betanaija42moro:

Incompetent APC administration. When the govt can not make good economic policies, this is what you see.

lol. Definitely you can't be a teacher

LoveGifted:
Please 1 Dollar is now 730 Naira.

I am not a good economist or political analyst but I need a good person to help me explain what makes dollar rise in Nigeria.

I can't really understand what's happening.

Generally because while we heavily depend on the dollar for most of our businesses (we are a heavily import dependent economy), we do not have ways to earn the dollar, we don't export much.

Corruption makes even the multinationals that should have helped earn us dollars are cheating the system.

And of course massive theft of endemic proportions. Most especially in this present administration. The dollar scarcity just doesn't make sense, almost like our politicians are hoarding it for some reason.