What exactly Is The Benefit Of Floating The Naira? Here's what I think though...

Well! Floating the Naira means letting its worth be decided by buyers & sellers, not the government.

Benefits can be like:

More competitive exports: Like it makes Nigerian goods cheaper abroad, potentially boosting sales & bringing in more foreign cash.
More freedom for the Central Bank: Lets them focus on controlling inflation without worrying about the exchange rate as much.
More flexibility: The currency can adjust to economic changes, thereby helping the economy adapt over time.
But there are downsides too, like short-term price swings and uncertainty for businesses. It's really a complex issue!

Peppysco:


Your rigid,unyielding and dark mindset won't make you understand all the explanations given. Your mind is programmed already, nothing will make any sense to you right now.

Am telling you... So far I have learned one or two things on this topic

PoliteActivist:
*Politeness*
It will bring in people and investments.
Don't you see US always accusing China of intentionally devaluing their currency?
Example, if Togo devalues their currency you'd be going there to buy stuff and vacations, but if they inflate their currency you won't go

Why are those investors not rushing to invest in Zimbabwe, Argentina or Lebanon?

Foreign investors want to invest in a nation with a relatively stable currency not one with galloping inflation.

The best they'd seek would be to buy unprocessed natural resources for pennies leaving the locals in penury.

Still on investors, the first foreign investors you'd get would be Nigerians in diaspora. If this group have stopped investing back and only send money for living expenditure, then is it foreigners that'd rush to invest?

DeLaRue:
During Buhari's government, Nigeria, through the CBN, was spending according to some estimates, more than $12billion per year to maintain 2 exchange rates N440, and I think N570 to a dollar.

That $12 billion dollars was effectively a subsidy.

By the time Buhari left, Nigeria had just about $3.5 billion in its account. It is from that amount that we have to pay our debts and pay for imports of goods.

As you can see, Nigeria no longer had the $12 billion dollars required to keep naira/dollar rate at less than N600. So the current government had no choice but to give up on trying to subsidise the naira.

If Atiku or any other candidate had won, they would have had no choice than to follow the same path.

It is like buying a BMW when you had money. If you no longer have money to maintain it, what do you do, you give it up. No be so?

Your friends and neighbours who see you taking Okada will call you stupid for giving up such a beautiful car. But, younno longer have know what they don't know - you no longer have the money to maintain the car.

This is exactly where Nigeria is at present.

Fl they Lord and saviour promised to the same , it's because they hate Tinubu that' is why their don't want to admit

Jessyjeff:
Please, just say APC mismanaged the Naira by over borrowing and floating of the currency.

When Obasanjo took over in 1999, Nigeria had around 3 billion dollars in foreign reserve. Nigeria was still then heavily dependent on importation; he didn't float Naira, and he didn't stop subsidy on petrol, diesel and Kerosene.

Yet, Nigeria's inflation rate was under 15% and food was affordable too. He assembled able hands who were able to grow the economy and pay Nigeria's debts or negotiate some debt forgiveness.

Why did everything about Nigeria's economy start deteriorating rapidly immediately APC took over government in 2015? APC has no clue about economic management, especially on federal level.

Obidients as usual.
Dropping figures with unguarded recklessness,

PoliteActivist:
*Politeness*
It will bring in people and investments.
Don't you see US always accusing China of intentionally devaluing their currency?
Example, if Togo devalues their currency you'd be going there to buy stuff and vacations, but if they inflate their currency you won't go

You have almost solve the puzzle. China can float their currency because China has great export in trade than import.
If you ask tinubu if he understood the economic technicalities behind floating a currency, I believe he doesn't have a clue.
Back.

For a country to float her currency, export must be greater than import. The balance of trade must be in surplus, investment confidence in a country must be all round positive, security and local production must substitute foreign goods, etc. If all these are in place, then naira cam compete head to head with other currency

DeLaRue:
During Buhari's government, Nigeria, through the CBN, was spending according to some estimates, more than $12billion per year to maintain 2 exchange rates N440, and I think N570 to a dollar.

That $12 billion dollars was effectively a subsidy.

By the time Buhari left, Nigeria had just about $3.5 billion in its account. It is from that amount that we have to pay our debts and pay for imports of goods.

As you can see, Nigeria no longer had the $12 billion dollars required to keep naira/dollar rate at less than N600. So the current government had no choice but to give up on trying to subsidise the naira.

If Atiku or any other candidate had won, they would have had no choice than to follow the same path.

It is like buying a BMW when you had money. If you no longer have money to maintain it, what do you do, you give it up. No be so?

Your friends and neighbours who see you taking Okada will call you stupid for giving up such a beautiful car. But, younno longer have know what they don't know - you no longer have the money to maintain the car.

This is exactly where Nigeria is at present.

... See the jagoon you wrote there.
Which is 3 billion?
Stop misleading the public. Our foreign reserves when Buhari left stood at 36 billion dollars.

The question we should be asking our self is why is the foreign reserve not rising while still going down?
Where are the savings as a result of subsidy removal?

Inspirer1:

Haven't you observed that those supporting it are doing so with theories, that doesnt work in Nigeria, theres corruption, insecurity, and we aint even a production country, how can those theories work here, they have not mentioned just 1 positive impact the action now has on Nigeirans. Before they complete one sentence 'will' must appear.

It has been months now since subsidy removed and subsequently Naira floated, they should tell us just 1 (one) ease it has brought to Nigerians.

I knew things would get bad when the World Bank director for Nigeria, Shubham Chaudhuri, was very prominent onNigeria's media and finance conference. The free market theory only works for productive countries with something to sell. Nigeria can't even produce the food that they eat due to insecurity and poor infrastructure.

Shubham Chaudhuri, World Bank country director for Nigeria, says the bank has committed over $11 billion in the past three years to the government at both the federal and the sub-national levels.1 Nov 2023

Wale Edun: Nigeria appointed to lead World Bank’s African governors’ forum
https://www.thecable.ng/wale-edun-nigeria-selected-to-lead-world-banks-african-governors-forum

ckc:
which one is people and investments? I don't want all those sweet economic jargons. Describe any benefit the way a layman will understand it.

The one benefit is that all these bank MD’s will stop being stupidly rich by round tripping on our common wealth, if well implemented it can reduce a lot of corruption. I have a feeling that the economic hardship is just a way for the economy to rebase. And again, corruption will fight back for a while.

Mind you I’m not a fan of Tinubu, but I’m optimistic.

kokoA:
In Nigeria locally produced items are more expensive than imported ones.

That one na greed from our own people, this is where price control is needed.

Someone ones told me how Nigerians that deals on tiles go to one factory in agbara, ogun state to buy tiles.
But, these traders will tell you and I that the tiles are imported, forcing to buy it costly believing its really imported.
So, who's to blame?

kokoA:
In Nigeria locally produced items are more expensive than imported ones.

Yes that's true, a benin woman told me they still sell rice at the rate of 40k per bag there at benin republic whereas local rice is 70k, someone should tell me why I need to purchase a local one if I could get my hands on the foreign one

In other words, it is a long, long term solution

malali:
Cheaper Exports: When the Naira is devalued, it becomes less valuable compared to other currencies. This makes Nigerian products cheaper for people in other countries. Think of it like selling your cool toy cars to friends abroad at a lower price. More exports mean more money flowing into Nigeria!

Expensive Imports: On the flip side, devaluation makes foreign toys (imports) more expensive for you. Imagine your favorite video games suddenly costing more because they’re imported. This encourages people to buy local toys instead.

Boosting Local Industries: When local toys (goods and services) become cheaper for foreigners, it helps Nigerian businesses grow. They can sell more, hire more people, and contribute to the economy.

Tourism Advantage: Devaluation makes Nigeria an attractive travel destination. Foreign tourists find it cheaper to visit, explore, and spend money here. Imagine more tourists enjoying Nigerian culture, food, and music!

Investment Inflow: Investors like to put their money where it grows. Devaluation encourages foreign investors to set up factories, offices, and businesses in Nigeria. This creates jobs and stimulates economic growth.

Balance of Payments: Devaluation can improve Nigeria’s balance of payments. It’s like keeping track of how much money comes in (exports, investments) versus how much goes out (imports, debt payments). A positive balance is good!

Inflation: Devaluation can lead to higher prices for everyday items (inflation). Imagine your pocket money buying fewer candies because prices went up. But controlled inflation can be healthy for the economy.

Reducing Debt Burden: Nigeria owes money to other countries (national debt). Devaluation makes it easier to repay those loans because the Naira is worth less. It’s like paying back a smaller amount.

Competitiveness: Devaluation makes Nigerian businesses compete better globally. Just like you try to win in video game tournaments, our economy competes with other countries. A cheaper Naira gives us an edge!

Learning Opportunity: Finally, understanding devaluation teaches us about economics. It’s like leveling up in your favorite game. By knowing how money works, we can make smarter decisions for Nigeria’s future!

.....but if you don't fight corruption which is the biggest elephant in the room, all these will amount to nothing.

Deogratiasfx:


It simply means allowing the forces of demand and supply to influence the currency value as against CBN having a fixed the exchange rate.

It is the most realistic but it takes a smart government to take advantage of it. Hence, exports become cheap and imports become expensive.
People who export make so much because u bring in hard currency but when u import, u use ur huge money to get few things.

We are import based.. Get that in your head.
We import food to electronics to cars etc.
We are import not export based.


Nigeria will feel the real heat of the subsidy removal soon

malali:


[color=#990000]Reducing Debt Burden: Nigeria owes money to other countries (national debt). Devaluation makes it easier to repay those loans because the Naira is worth less. It’s like paying back a smaller amount.

This is actually completely wrong.

It makes local debts easier to pay because they are Naira debts and we get more Naira. However it makes the payment of foreign debts more difficult because now you need more Naira to pay foreign debts. This last point affects businesses and individuals who earn in Naira but have foreign debts for instance individuals who have mortgages abroad.

ckc:
Based on the catastrophe this floating of naira of a thing by Tinubu is causing to the economy, can anyone please educate me on the ONE benefit of this policy. I want to learn.

The question you should answer is what was the alternative? Answer this and you will get a well thought answer beyond the "Tinubu is a druggie crowd.

Sincerity is a prelude to truth.

sulaak:


I knew things would get bad when the World Bank director for Nigeria, Shubham Chaudhuri, was very prominent onNigeria's media and finance conference. The free market theory only works for productive countries with something to sell. Nigeria can't even produce the food that they eat due to insecurity and poor infrastructure.

hmmmm, so sad.

I wish we can get answers to the enquiries made in this tweet 👇
https://twitter.com/ishakaa/status/1757397594236395764

PoliteActivist:

*Politeness*
I modified my post. See above. It is not economic jargon, it is common sense. If my money can buy more in your house, I'd like your house and buy stuff from your house... until I realize I'm giving you all my money!

This thing you posted is nonsense. Nigeria isn't China. We produce close to nothing. It is a producing economy that can confidently crash it's currency. When you import almost everything, you don't want your currency to be weak. Simple!

By and large, it's a diabolic policy aimed PAUPERISING IMPOVERISHING /the people at the expense of foreigners and an avenue for making more LOOT available to fund the LAVISH LIFESTYLE OF SELF SERVING LegisLOOTERS, execuTHIEVES etc!
The shyyythole is cursed with useless, self serving THIEVES masquerading as leaders! 💯💯

# ENOUGH OF NONSENSE

Gadafii:
unfortunately the reverse is the case, more firms ad businesses are packing up on a daily, in fact international companies in their numbers have left the shore of Nigeria due tho this valueless naira e dollar and other factors

This are companies making gains from the previous arrangement.

Has it brought people and investments? What is nigeria producing that she wants to export that warranted floating of the naira? Nigeria is running a monoeconomy based on crude. Floating naira was a reckless miscalculation of tinubu's government that has killed the naira and brought untold hardship to the citizenry. Anybody still supporting this government should be ashamed of his or herself.

PoliteActivist:
*Politeness*
It will bring in people and investments.
Don't you see US always accusing China of intentionally devaluing their currency?
Example, if Togo devalues their currency you'd be going there to buy stuff and vacations, but if they inflate their currency you won't go

DeLaRue:
During Buhari's government, Nigeria, through the CBN, was spending according to some estimates, more than $12billion per year to maintain 2 exchange rates N440, and I think N570 to a dollar.

That $12 billion dollars was effectively a subsidy.

By the time Buhari left, Nigeria had just about $3.5 billion in its account. It is from that amount that we have to pay our debts and pay for imports of goods.

As you can see, Nigeria no longer had the $12 billion dollars required to keep naira/dollar rate at less than N600. So the current government had no choice but to give up on trying to subsidise the naira.

If Atiku or any other candidate had won, they would have had no choice than to follow the same path.

It is like buying a BMW when you had money. If you no longer have money to maintain it, what do you do, you give it up. No be so?

Your friends and neighbours who see you taking Okada will call you stupid for giving up such a beautiful car. But, younno longer have know what they don't know - you no longer have the money to maintain the car.

This is exactly where Nigeria is at present.

All this things you mentioned there was created by APC, how much was dollar before APC catastrophic government took office? They created this 2 exchange windows for them and themselves, they will sell dollars at N440 to their cronies who will now sell at N600 - N700 to importers. Nigeria can never tackle it problem with APC goons being in power, Nigeria needs honesty leader not this quarks

PoliteActivist:

*Politeness*
I modified my post. See above. It is not economic jargon, it is common sense. If my money can buy more in your house, I'd like your house and buy stuff from your house... until I realize I'm giving you all my money!

So what does Nigeria really produce to warrant the floating of the naira as per compared to what China are producing?

ezekins:
Has it brought people and investments? What is nigeria producing that she wants to export that warranted floating of the naira? Nigeria is running a monoeconomy based on crude. Floating naira was a reckless miscalculation of tinubu's government that has killed the naira and brought untold hardship to the citizenry. Anybody still supporting this government should be ashamed of his or herself.

Don't mind them. If devaluation is what makes a country's economy great, Venezuela and Zimbabwe should have the best economies in the world.

They forget the likes of Saudi and UAE, who being petrodollar economies, defend and maintain a very stable exchange rate immune from shocks that come with the cyclical nature of crude prices.

ckc:
Based on the catastrophe this floating of naira of a thing by Tinubu is causing to the economy, can anyone please educate me on the ONE benefit of this policy. I want to learn.

I am sure people have done justice to the benefit . However the issue with Tinubu’s policy is that he didn’t do it with our insatiable appetite for foreign goods in mind . The demand for dollars to import is too much . Also the prevalent corruption in our banking sector and CBN as well.
What he should have done was ban parallel markets . Also make it that You can’t deposit more than 1,000 dollars physically in Nigeria into your domicilary account in a month any thing else should be at CBN with EFCC present . All earned dollars in your Dom account can only be withdrawn in Naira . Lastly after everything has stabilized , let Naira cards transact online with a cap and inability to withdraw dollars abroad .

Thanks for this great question and thanks also goes to those that shed more light on this very educative and informative

PoliteActivist:
*Politeness*
It will bring in people and investments.
Don't you see US always accusing China of intentionally devaluing their currency?
Example, if Togo devalues their currency you'd be going there to buy stuff and vacations, but if they inflate their currency you won't go

Wrong! Devaluation encourages export only when you have things to export. What exactly is Nigeria producing for export? Absolutely nothing!
US complain about China's currency devaluation because China is the global center for production. Almost every thing the world use today are made in China.

Ah, the government had the audacity to inform us mere mortals that there are insufficient funds to continue defending the naira, as if we weren't already aware of their incompetence. Instead, they've decided to squander 24 billion naira on funding hajj, evidently prioritising their own agendas over the welfare of the nation. Typical government mismanagement, I dare say.

PoliteActivist:
*Politeness*
It will bring in people and investments.
Don't you see US always accusing China of intentionally devaluing their currency?
Example, if Togo devalues their currency you'd be going there to buy stuff and vacations, but if they inflate their currency you won't go

What’s with the *Politeness* you always put before commenting?😏

Not like it’s one interesting sig. 😒

004gist:

... See the jagoon you wrote there.
Which is 3 billion?
Stop misleading the public. Our foreign reserves when Buhari left stood at 36 billion dollars.

The question we should be asking our self is why is the foreign reserve not rising while still going down?
Where are the savings as a result of subsidy removal?

Nigeria had no foreign reserves. The Buhari cabal decimated the funds. The majority of the reserves were made up of loans and bonds from Western banks.

A combination of foreign exchange forwards, securities lending, currency swaps, and outstanding contracts has weakened Nigeria's net external reserves to an all-time low of $3.7 billion as of the end of last year, according to JP Morgan.22 Aug 2023
https://businessday.ng/news/article/jp-morgans-shock-reveal-puts-nigerias-fx-reserves-at-3bn/#:~:text=A%20combination%20of%20foreign%20exchange,year%2C%20according%20to%20JP%20Morgan.

“The economy was poorly managed, and they are not willing to take advice; in the last eight years, apart from sycophancy, nothing has been done; those sycophants are those buying the dollar at the rate of N400 and selling it at the rate of N600 to N700.

“A boy who has no record of service has a private jet and owns houses in Dubai and England just because he is buying dollars at so a rate and selling them.
https://tribuneonlineng.com/blame-buhari-not-tinubu-for-economic-hardship-sanusi-tells-nigerians/

The only benefit one will tell you is the basic economics we all studied in schools, that if you devalued your currency, you encourage export and discourage import, though that is the best thing to do but in our situation, what do we produce for export, almost all industries had closed due to power situations, diesel to power machines is out of reach, we should have rectified power, encourage production before devalueing our currency, Japanese and Chinese did it this way and they are better for it but we put the horse before the cart, see the hardship it brought to the citizens, other presidential candidates would have done it differently, though it's not too late to make amends and reduce the hardships on the citizens

ckc:
Based on the catastrophe this floating of naira of a thing by Tinubu is causing to the economy, can anyone please educate me on the ONE benefit of this policy. I want to learn.

We won't know because we're the ones making the shift in real time.

Future generations would benefit from it because they won't know either that the Naira was floated. This pricing would be natural to them.