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.

It's supposed to be the best thing, but look at Nigeria, we don't produce anything, even the few we produce, where is the light to operate machines?

Maxxim:

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

Bro Hwfa, the price you got from the woman how recent is it?
And the local rice selling for 70k is it in Lagos or Benin republic?

If you can answer please do. Make I com flood Lagos market with local rice at 60k per bag 😋

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!

What you are saying is theoretical, we've seen the devastating effect of such policy,our voodoo economist always forget their parlance cetris paribus when postulating
They just copy and paste
China that is devaluing, we don't have same environment and values, so we can't get same result, e.g their leaders are less corrupt,they put their nation first unlike our own,they have highly developed infrastructure that can aid production,their government supports their industries big or small with whatever they need,the have adequate factors of production,men, capital, technology, enabling environment
Above all they have mirages of products to export to generate the required forex
Unlike Nigeria that is a monoproduct country, who doest even have control over the price of the product or even quantity to produce
How is such a country going to benefit from devaluation or floating, impossible

Benefits of floating of the naira works better in an economy that's production based and not consumption. Nigeria right now is not favorable in terms of producing local goods because amenities (e.g. electricity) are simply not in place.
Some of the policies of this govt is good on paper but in practice, it's a disaster cos a lot of things were not put in place to help promote the currency.

surgical:
What you are saying is theoretical, we've seen the devastating effect of such policy,our voodoo economist always forget their parlance cetris paribus when postulating
They just copy and paste
China that is devaluing, we don't have same environment and values, so we can't get same result, e.g their leaders are less corrupt,they put their nation first unlike our own,they have highly developed infrastructure that can aid production,their government supports their industries big or small with whatever they need,the have adequate factors of production,men, capital, technology, enabling environment
Above all they have mirages of products to export to generate the required forex
Unlike Nigeria that is a monoproduct country, who doest even have control over the price of the product or even quantity to produce
How is such a country going to benefit from devaluation or floating, impossible

But we are talking of floating NOT devaluation as China practices. Do you know some products you buy made in China and be wondering how they can be so cheap were bought in China for 20% of what you paid?!
And how do you think Nigeria will be forced to stop being a monoproduct country dependent on imports?

Most of the economist who commented so far failed to understand that Nigeria is a peculiar place where economic principles will always fail because of the type of people the corrupt system had produced over the years.

Likewise, US & UK will never devalue their own currency but will always encourage us to do so using the same economic principles we are all quoting as a bait.

Allow death penalty to fight corruption like Japan or china and see what Nigeria will become in 4 years.

PoliteActivist:


But we are talking of floating NOT devaluation as China practices. Do you know some products you buy made in China and be wondering how they can be so cheap were bought in China for 20% of what you paid?!
And how do you think Nigeria will be forced to stop being a monoproduct country dependent on imports?

floating and devaluing is the same thing at least from the effect
We have been devaluing in Nigeria or aiming at proper value for the naira for a long time and we have never achieved what they preach we will get if we take the prescription I wonder why our leaders still fall for same bull shit
To move away from monoproduct, we must diversity, Starr from product we have comparative advantage in
We mustn't put the cart before the horse as we have done,the country is a going concern is not dieing anytime soon,why take hasty decisions, proper thoughts must be put Into our policy formulation,and government should endeavour to avoid voodoo economist at all cost,they are bad news always

Kenochi:
Kill off the parallel market and allow all dollars to go through the banking system only
I was informed that Nigeria is the one of the very few countries in the world that has a parallel market
A friend told me a funny story, he said he was explaining to his friend who was not a Nigerian this double rates and the guy kept asking why we have such operations
Also,with this new rule of collecting all dollars in naira,some illegal operations will just collapse
I don't want to mention anybody but these group knows themselves

Shut up your sillly mouth.
You have not gone anywhere. There is parallel market even in Dubai, malaysia, China etc.
Nigeria govt is a failure

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.

No benefits

We are a consuming nation, we produce nothing

orisa37:
NO BENEFIT AT ALL. IT IS ALL NEGLIGENCE, IRRESPONSIBILITY AND RECKLESSNESS. GOVERNMENT IS UNABLE TO REGULATE THE ECONOMY "COWEL".

u knw nothing

It is compete foolishness to justify devaluing the naira because China does same. china and Nigeria are not in the same class in so many areas. Industries don't run on generator in China, China has enough productive capacity that can serve one third of the world's population. So devaluing their currency is strategic to boost their economy. In the case of Nigeria devaluing the naira causes inflation because farmers are selling all their goods to neighbouring countries causing food shortage and inflation.

surgical:
floating and devaluing is the same thing at least from the effect
We have been devaluing in Nigeria or aiming at proper value for the naira for a long time and we have never achieved what they preach we will get if we take the prescription I wonder why our leaders still fall for same bull shit
To move away from monoproduct, we must diversity, Starr from product we have comparative advantage in
We mustn't put the cart before the horse as we have done,the country is a going concern is not dieing anytime soon,why take hasty decisions, proper thoughts must be put Into our policy formulation,and government should endeavour to avoid voodoo economist at all cost,they are bad news always

Nope, floating iis not devaluing at all. Let's say the true market value is $1=N2K, and the government intentionally pegs it at $1=N3K, that's devaluation. Most people will no longer be able to afford anything foreign and be forced to look inwards. So also most foreign travels will cease. Those in diaspora will be comming home to buy, invest, and vacation - no matter the amount of insecurity (that's just how people are), foreign countries will look for ways to assemble in Nigeria, remote work, etc. Nigerians will device all sorts of ways to make dollars!

aviara:
It is compete foolishness to justify devaluing the naira because China does same. china and Nigeria are not in the same class in so many areas. Industries don't run on generator in China, China has enough productive capacity that can serve one third of the world's population. So devaluing their currency is strategic to boost their economy. In the case of Nigeria devaluing the naira causes inflation because farmers are selling all their goods to neighbouring countries causing food shortage and inflation.

Nigeria is floating while China is devaluing.
Who will the farmers of those countries sell to?

PoliteActivist:


Nope, floating iis not devaluing at all. Let's say the true market value is $1=N2K, and the government intentionally pegs it at $1=N3K, that's devaluation. Most people will no longer be able to afford anything foreign and be forced to look inwards. So also most foreign travels will cease. Those in diaspora will be comming home to buy, invest, and vacation - no matter the amount of insecurity (that's just how people are), foreign countries will look for ways to assemble in Nigeria, remote work, etc. Nigerians will device all sorts of ways to make dollars!

This theoretical, why have uk ,us other countries devalue their currency or don't they want prosperity like you deserve, its because it doesn't work that way
It is just grammar floating is devaluation it's same thing coined in another way, they both achieve same thing, and this market forces you guys alway talk about does not always allocate efficiently ,reason no serious government leaves the value of its currency to the vagries of market forces
My last line on this ,the experiment the voodoo economy has always advocated has been implemented now, we are waiting to see the eldorado it will bring, I hope they won't change the narrative latter after seeing the irreparable damage the ill coincided idea is
I just hope in the long run we are not all dead
Because they are going to be telling us the eldorado is in the long run

surgical:
This theoretical, why have uk ,us other countries devalue their currency or don't they want prosperity like you deserve, its because it doesn't work that way
It is just grammar floating is devaluation it's same thing coined in another way, they both achieve same thing, and this market forces you guys alway talk about does not always allocate efficiently ,reason no serious government leaves the value of its currency to the vagries of market forces
My last line on this ,the experiment the voodoo economy has always advocated has been implemented now, we are waiting to see the eldorado it will bring, I hope they won't change the narrative latter after seeing the irreparable damage the ill coincided idea is
I just hope in the long run we are not all dead
Because they are going to be telling us the eldorado is in the long run

Well.people are already complaining, complaining o, that floating has reduced the rate of japa. Keeping our youth and brains and visa money here is a bad thing!.
If Nigeria were blockaded, no imports, only exports, what do you think will happen? Do you think Nigerians will die off?
Countries can't just devalue anyhow - it is like reducing your price to beat the competition - they will reduce their prices too! (Or they will buy up your supply and hoard to sell back to you when you run out!) Also see below

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

*Politeness*
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!

*Politeness*
Here's just one particular example: i read somewhere that floating has reduced the rate of japa. Who is losing? Those countries that would have gotten money from visa, etc, plus take our youth and brains. Who is gaining in the long run? Nigeria!

*Politeness*
Actually the government just said, let's stop wasting resources trying to artificially hold up naira (with the attendant round-tripping, corruption, black market, hoarding, and speculation) and just let the market decide it's value, with everything out in the open.

*Politeness*
With float and a single exchange rate, diasporan remittances will go through official channels and CBN will get a cut, while before most such remittances never actually made it into the country!

*Politeness*
Floating is different from inflation. Also it depends on the type of country. Nigeria is the the type of country that CANNOT lose in the long run by floating her currency.
The only losers will be those who wish to travel, those who need to buy foreign, round trippers, blackmarketers, currency hoaders and speculators, corrupt government and CBN insiders, airlines, foreign countries who'd get less of our japa youths, brains, and visa money!

Okay, let us cut to the chase partner. The USA supports the dollar indirectly, how? by increasing the yield on the Treasury Notes. The 10-year T-Bills yield is actually what trends very closely to the mortgage rate. They will increase the yield to draw foreign capital to buy their debt, which in essence serves two purposes 1. Finance the country's debt, 2. Provide artificial liquidity support to the dollar. With a budget deficit of close to 34 Trillion Dollars USA is now a country too big to fail. Nigeria shouldn't have floated the Naira, the same bankers advising Nigeria to float her currency just happened to be shortening the currency. They are all betting against the Naira. To correct this, peg the currency to varying bands of N700 - N1000. This will in the short term lead to higher borrowing rates, but overall bring down inflation and cut food prices.
Provided the country can reduce the cost of governance, 65% of Nigeria's budget goes toward governance like paying Senators, House of Reps, and so forth.

t2luv1:


Okay, let us cut to the chase partner. The USA supports the dollar indirectly, how? by increasing the yield on the Treasury Notes. The 10-year T-Bills yield is actually what trends very closely to the mortgage rate. They will increase the yield to draw foreign capital to buy their debt, which in essence serves two purposes 1. Finance the country's debt, 2. Provide artificial liquidity support to the dollar. With a budget deficit of close to 34 Trillion Dollars USA is now a country too big to fail. Nigeria shouldn't have floated the Naira, the same bankers advising Nigeria to float her currency just happened to be shortening the currency. They are all betting against the Naira. To correct this, peg the currency to varying bands of N700 - N1000. This will in the short term lead to higher borrowing rates, but overall bring down inflation and cut food prices.
Provided the country can reduce the cost of governance, 65% of Nigeria's budget goes toward governance like paying Senators, House of Reps, and so forth.

And where will you get the forex to peg at 700 - 1K. Also there'd be plenty of Naira chasing the undervalued dollar. Where will you get the dollars to satisfy such demand. So you have to deal with aboki blackmarketers and round tripping of govt insiders and hoarding and most diasporan remittances never reaching the country, and people preferring foreign because of cheap dollar therefore domestics suffering, and, and, and!

GeneralDae:

If as you say you export nothing, then how do you defend the naira? If you can't defend it well because of lack of dollars then you widen your black market while you keep it at one rate. You have it at 450 and your black market was around 750.

Why not fight insecurity and ramp up production for exportation before floating the naira?

Marpol:


Why not fight insecurity and ramp up production for exportation before floating the naira?

Easier said than done. Doing all that is a process. When there was no insecurity, how much non oil export did we do and how long would it take us to resolve the problem? I'm not sure you even know what you are talking about.
You don't just wave your hand and start exporting all of a sudden.

[quote author=GeneralDae post=128458928]
Easier said than done. Doing all that is a process. When there was no insecurity, how much non oil export did we do and how long would it take us to resolve the problem. I'm not sure you even know what you are talking about.


LoL! That's your response?

Marpol:
LoL! That's your response?

*Politeness*
It's not a bad response. Those are hard, long-process things to do. If I were a dictator, I'd peg the Naira at 500 per $, BUT no importation of any kind except raw materials for local industries. Only local-made will be used in Nigeria. But I know other countries will cry fowl - why would they allow us access to their markets if we don't allow them access to ours

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

*Politeness*
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!

*Politeness*
Here's just one particular example: i read somewhere that floating has reduced the rate of japa. Who is losing? Those countries that would have gotten money from visa, etc, plus take our youth and brains. Who is gaining in the long run? Nigeria!

*Politeness*
Actually the government just said, let's stop wasting resources trying to artificially hold up naira (with the attendant round-tripping, corruption, black market, hoarding, and speculation) and just let the market decide it's value, with everything out in the open.

*Politeness*
With float and a single exchange rate, diasporan remittances will go through official channels and CBN will get a cut, while before most such remittances never actually made it into the country!

*Politeness*
Floating is different from inflation. Also it depends on the type of country. Nigeria is the the type of country that CANNOT lose in the long run by floating her currency.
The only losers will be those who wish to travel, those who need to buy foreign, round trippers, blackmarketers, currency hoaders and speculators, corrupt government and CBN insiders, airlines, foreign countries who'd get less of our japa youths, brains, and visa money!

Your analysis is good, but Nigeria will not benefit, rather it will increase hardships in the country. We don't export to other countries. We rather import. Assuming that we export, the floating of naira would have made our exports cheap and import dare. In the long run bringing in alot of forex. This is reason why US always accused China of devaluing her currency thereby many Americans buy more Chinese goods at a cheap price and at the same time making Chinese buy less American goods bc of higher prices.

PoliteActivist:


*Politeness*
It's not a bad response. Those are hard, long-process things to do. If I were a dictator, I'd peg the Naira at 500 per $, BUT no importation of any kind except raw materials for local industries. Only local-made will be used in Nigeria. But I know other countries will cry fowl - why would they allow us access to their markets if we don't allow them access to ours

A bottle of chilled beer for this man!

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.

They no longer have the money yet we still see them buying luxury yatch,expensive cars,vacation allowances, outrageous budgets and spending,some in the name of house at office renovations for President,vice etc.

Recently I read they want to use 500million to bring Nija version of Grammy yet you say no money?

regenerateman:


Your analysis is good, but Nigeria will not benefit, rather it will increase hardships in the country. We don't export to other countries. We rather import. Assuming that we export, the floating of naira would have made our exports cheap and import dare. In the long run bringing in alot of forex. This is reason why US always accused China of devaluing her currency thereby many Americans buy more Chinese goods at a cheap price and at the same time making Chinese buy less American goods bc of higher prices.

*Politeness*
We don't necessarily have to export, we just have to stop importing (because price for foreign-related is too high). Example, foreigners don't have to japa here, we just have to stop japaing to their countries to benefit. I read where people were complaining that their japa has evaporated due to floating - but saving the country brain drain, youth flight, and visa and flight money!
But we are talking floating not devaluing as in China. Most products from China you consider so cheap cost the original buyer from China ⅛ of what you paid, wholesale!

Most people will no longer be able to afford anything foreign and be forced to look inwards. So also most foreign travels will cease. Those in diaspora will be comming home to buy, invest, and vacation - no matter the amount of insecurity (that's just how people are), foreign countries will look for ways to assemble products in Nigeria. Then there is remote work, online work, outsourcing,etc. Nigerians will device all sorts of ways to make dollars!

[quote author=malali post=128444238]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.

Local industries needs to be regulated. There is need for serious consumers protection law.

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.


Why are businesses folding up then?

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.

So, innocent Nigerian that are not involve in their lavish spending should keep on with the penury?

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.

In what way please, explain better.
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.

But local factories are milking masses dry with their outrageous prices.
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!

PoliteActivist:


It doesn't have to be big companies. People will learn how to make their own soaps and cough syrups, plus small mam and pap local manufacturers. Any local company that folds despite lack of competition from foreign-made (due to expensive dollar) should not be in business in the first place

So the ingredients for the soap will come from where? Or you want them to go back to potash soap?

AkpaMgbor:

So the ingredients for the soap will come from where? Or you want them to go back to potash soap?

*Politeness*
Sooo, before them we didn't wash clothes. This exactly illustrates it: China will make soap that you can make yourself and sell it to you cheaper than you can make it (even after you add transportation and middlemen mark-up) solely because they devalued their currency.
Soon you become addicted to their soap and forget that you can even also make soap!
You really think if imports were totally banned we will die off??

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!

No sense in all.
Why do people go to invest in UK and USA??
An investment of N200,000 last year is worth less than N150,000 now assuming the company is making profit o. U don't rush to invest in place where money is floating and falling like packs. Zimbabwe, Venezuela and co are examples.
In Nigeria, Naira will keep falling because govt is not providing many basic things to help investment or productivity. As much as there is high insecurity... Inflation will keep eating up everything.

tonyson010:


No sense in all.
Why do people go to invest in UK and USA??
An investment of N200,000 last year is worth less than N150,000 now assuming the company is making profit o. U don't rush to invest in place where money is floating and falling like packs. Zimbabwe, Venezuela and co are examples.
In Nigeria, Naira will keep falling because govt is not providing many basic things to help investment or productivity. As much as there is high insecurity... Inflation will keep eating up everything.

*Politeness*
What do you understand as "invest"? It includes lands and buildings and buying anything that's for sale because currency will makes it cheaper than where they are (which is how China maintains a trade surplus with most countries). Also vacations and very long vacations, insecurity or not (that's just human nature)

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

*Politeness*
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!

*Politeness*
Here's just one particular example: i read somewhere that floating has reduced the rate of japa. Who is losing? Those countries that would have gotten money from visa, etc, plus take our youth and brains. Who is gaining in the long run? Nigeria!

*Politeness*
Actually the government just said, let's stop wasting resources trying to artificially hold up naira (with the attendant round-tripping, corruption, black market, hoarding, and speculation) and just let the market decide it's value, with everything out in the open.

*Politeness*
With float and a single exchange rate, diasporan remittances will go through official channels and CBN will get a cut, while before most such remittances never actually made it into the country!

*Politeness*
Floating is different from inflation. Also it depends on the type of country. Nigeria is the the type of country that CANNOT lose in the long run by floating her currency.
The only losers will be those who wish to travel, those who need to buy foreign, round trippers, blackmarketers, currency hoaders and speculators, corrupt government and CBN insiders, airlines, foreign countries who'd get less of our japa youths, brains, and visa money!

In an import-dependent economy, you float and gain nothing. Had it been our production level is up a bit, this would have helped us. It hasn't worked for us. We've been devaluing since 80s and nothing has changed or improved.

tollyboy5:

Bro Hwfa, the price you got from the woman how recent is it?
And the local rice selling for 70k is it in Lagos or Benin republic?

If you can answer please do. Make I com flood Lagos market with local rice at 60k per bag 😋

That's the price it's been sold in Benin Republic, the issue is how to get it over here
Local rice is is what spiked the price of foreign rice be sold at higher price