Olaide1295:


Yes, You are basically paying CBN to help you keep your money at this point.
In a low T-bills regime, stocks should benefit.

From a macro perspective, crashing the rates may be good for the economy as less Naira is being produced. T-bills used to be free money for Nigerian banks.
The disadvantage is people will start to chase dollars with the Naira at hand

The bolded is not true. There will be excess liquidity in the system (i.e more Naira being produced). Low interest rates lead to more cash in the economy and worsens inflation. Lots of Tbills will mature shortly. Enough Naira will be in circulation. Also, on paper, people/businesses should be able to borrow more Naira from the banks at low interest rates. Leading to more Naira in circulation.

All the free Naira will be looking for where to park. Not everyone wants to go to the NSE. Some will start to spend that money to avoid losing to inflation. In the long run, this will lead to increase in prices of some goods. Exchange rates will suffer as some people want to keep money in USD or invest outside Naija. Leading to more pressure on the Naira and inflation as imports will become more expensive. Share prices will continue to climb to unsustainable levels as free Naira continue to enter NSE. All it takes is for some speculators to start cashing out or one big listed business to fail and boom, back to square one. It may even be a listed bank that may see increasing NPLs and report poor results. Triggering sell offs. God forbid sha.

In short, it’s not necessarily a good thing for an economy like Nigeria’s but I understand what the CBN is trying to do. They want people to spend that money and for businesses to borrow and expand. Just spend it and get the economy going. On paper, it sounds good. In reality, another story entirely.

tracyorez:

Thanks for this info
I just sent a mail to first contact and copied cbn.i requested to know why the treasury bill I bought did not drop since September.
Let me start from there.

Madam, any update? Has Oga pot belly paid up? Has he sent your loan documents? Any response from First Bank?

Lazyyouth4u:

The bolded is not true. Low interest rates lead to more cash in the economy and worsens inflation. Lots of Tbills will mature shortly. Enough Naira will be in circulation. Also, on paper, people/businesses should be able to borrow more Naira from the banks at low interest rates. Leading to more Naira in circulation.

All the free Naira will be looking for where to park. Not everyone wants to go to the NSE. Some will start to spend that money to avoid losing to inflation. That will lead to increase in prices of some goods. Exchange rates will suffer as some people want to keep money in USD. Leading to more inflation as imports will be more expensive. Share prices will continue to climb to unsustainable levels as free Naira continue to enter NSE. All it takes is for some speculators to start cashing out or one big listed business to fail and boom, back to square one. It may even be a listed bank that may see increasing NPLs and report poor results. Triggering sell offs. God forbid sha.

In short, it’s not necessarily a good thing for an economy like Nigeria’s but I understand what the CBN is trying to do. They want people to spend that money. Just spend it and get the economy going. On paper, it sounds good. In reality, another story entirely.

Inflation in Nigeria is not caused by high cash in the economy but by pass-through of increased dollar prices of import to consumers.
I see your perspective, but I think that's a short term strategy which will compound the problem if implemented. My reason below:

Increasing T-bills rates will only absorb the Naira in circulation for a year. The problem will resurface the next year which will be worse. Compound their money over a few years and you are in trouble.

Low borrowing interest-rates is only on paper as you said. So count that out.

Pension funds are the one accumulating on NSE, they don’t rush to sell.

The only problem is that the free Naira will chase dollars, but better now than pushing it down to next year. In practical Economics, good things are usually painful

I sweep for this country.

DexterousOne:


This freefall is very worrisome
The by product of leadership crisis

Lazyyouth4u:

The bolded is not true. Low interest rates lead to more cash in the economy and worsens inflation. Lots of Tbills will mature shortly. Enough Naira will be in circulation. Also, on paper, people/businesses should be able to borrow more Naira from the banks at low interest rates. Leading to more Naira in circulation.

All the free Naira will be looking for where to park. Not everyone wants to go to the NSE. Some will start to spend that money to avoid losing to inflation. That will lead to increase in prices of some goods. Exchange rates will suffer as some people want to keep money in USD. Leading to more inflation as imports will be more expensive. Share prices will continue to climb to unsustainable levels as free Naira continue to enter NSE. All it takes is for some speculators to start cashing out or one big listed business to fail and boom, back to square one. It may even be a listed bank that may see increasing NPLs and report poor results. Triggering sell offs. God forbid sha.

In short, it’s not necessarily a good thing for an economy like Nigeria’s but I understand what the CBN is trying to do. They want people to spend that money. Just spend it and get the economy going. On paper, it sounds good. In reality, another story entirely.

Good analysis

Olaide1295:


Inflation in Nigeria is not caused by high cash in the economy but by pass-through of increased dollar prices of import to consumers.
I see your perspective, but I think that's a short term strategy which will compound the problem if implemented. My reason below:

Increasing T-bills rates will only absorb the Naira in circulation for a year. The problem will resurface the next year which will be worse. Compound their money over a few years and you are in trouble.

Low borrowing interest-rates is only on paper as you said. So count that out.

Pension funds are the one accumulating on NSE, they don’t rush to sell.

The only problem is that the free Naira will chase dollars, but better now than pushing it down to next year. In practical Economics, good things are usually painful

Best analysis.

Inflation is driven by imports not excessive cash.

Why?


Nigeria is unproductive.

seyisanya:
I laugh when people try to defend their involvement in a Ponzi scheme with the phrase ''just invest the amount you're willing to lose''.

Seriously? So some people really earmark a certain amount as what they're willing to lose. What exactly does that mean?

Even if I'm worth a billion naira, I'm not going to willingly put a million naira in what is clearly Ponzi!

Instead of willingly loosing it, why not give it to charity?.

jajeri3216:


Best analysis.

Inflation is driven by imports not excessive cash.

Why?


Nigeria is unproductive.

A lot of you don't understand how things work unfortunately.
What causes imports to be more expensive?
Because fx has increased in price or naira has depreciated right?
Why did the naira depreciate?because fx is scarce so too much naira is chasing scarce fx right?
What if you can also make the naira scarce?Is is not with naira you'll use to buy fx?what if you don't have that naira to use to buy fx?
Don't that tell you that the naira will have more value because of this and in turn reduce inflation?
Curbing naira is a good way to fight inflation.

TransAtlanticEx:
A lot of you don't understand how things work unfortunately.
What causes imports to be more expensive?
Because fx has increased in price or naira has depreciated right?
Why did the naira depreciate?because fx is scarce so too much naira is chasing scarce fx right?
What if you can also make the naira scarce?Is is not with naira you'll use to buy fx?what if you don't have that naira to use to buy fx?
Don't that tell you that the naira will have more value because of this and in turn reduce inflation?
Curbing naira is a good way to fight inflation.

So the solution you are suggesting is to create an artificial Naira scarcity by increasing rates of Tbills?
What happens when those bills mature, you were trying to reduce supply but now have increased it?

Lazyyouth4u:

Madam, any update? Has Oga pot belly paid up? Has he sent your loan documents? Any response from First Bank?

Things have been moving since after the mail I sent copying first contact and cbn.
He first told me to write for the loan to be officially closed and yesterday,he sent a message that I should officially write again that treasury should release my money which I couldn't go yesterday but did it first thing today.
Immediately I walked into the bank,the lady that told me it will take time before and a second lady who told me she doesn't know if the money dropped starting saying "madam why now,why now ,that mail you sent,our boss called and directed we conclude the case asap that's why we told you to come and write yesterday bla bla bla at least you have now seen that indeed treasury withheld your money bla bla bla".but I told them to give me paper to officially write what I came to write and after writing,I told them I am closing the account once the money drops and other accounts I have with first bank and they became cold and I just walked out.
Infact I don't know how this case would have been if I dint involve you guys.
I really appreciate all the advice I got here.
I am now certain an alert will come and
I don't feel guilty cos they are trying to make me.

TransAtlanticEx:
A lot of you don't understand how things work unfortunately.
What causes imports to be more expensive?
Because fx has increased in price or naira has depreciated right?
Why did the naira depreciate?because fx is scarce so too much naira is chasing scarce fx right?
What if you can also make the naira scarce?Is is not with naira you'll use to buy fx?what if you don't have that naira to use to buy fx?
Don't that tell you that the naira will have more value because of this and in turn reduce inflation?
Curbing naira is a good way to fight inflation.

Poor fiscal management indeed can lead to inflation but the core of devaluation in Nigeria is solely over dependence on imports and little inflow of forex due to over reliance on crude oil for fx.

A tendency to keep the currency strong is built into the structure of African economies. ... Governments fear depreciation because they depend on imported capital to finance infrastructure projects; a weak currency forces them to raise more revenue to pay back foreign debts.

Extractive vs inclusive economies

Olaide1295:

So the solution you are suggesting is to create an artificial Naira scarcity by increasing rates of Tbills?
What happens when those bills mature, you were trying to reduce supply but now have increased it?

There are better ways to curb the naira than paying high interest in the debt market.
Also,a 3 year delay in naira depreciation will help a lot because by then Dangote refinery must have come up and crash the import of petrol and its derivatives,hence more fx to defend the naira.
What I would do if I was CBN governor is give you high interest rates now to tie your money for 3 years so that by then Dangote and other refinery must have started operation and i must have built my reserves very well,
I will continue build my reserves for 2 more years and stop paying you high interest and also not defend the naira immediately so that the naira you made from my time of desperation(high interest payment which is now) will be wiped by inflation(this is what happens to all the "free naira" you asked me about)
Then I start defending the naira after you(debt buyers) must have gone wretched
Have I not solved your problem like this?

jajeri3216:


Poor fiscal management indeed can lead to inflation but the core of devaluation in Nigeria is solely over dependence on imports and little inflow of forex due to over reliance on crude oil for fx.

A tendency to keep the currency strong is built into the structure of African economies. ... Governments fear depreciation because they depend on imported capital to finance infrastructure projects; a weak currency forces them to raise more revenue to pay back foreign debts.

Extractive vs inclusive economies

You think government exchanges its naira earnings for fx to repay fx denominated debts?
What happen to the fx earnings?

TransAtlanticEx:
You think government exchanges its naira earnings for fx to repay fx denominated debts?
What happen to the fx earnings?

They have to earn more forex to pay, an unending vicious cycle.

Study this to understand the problem with most African economies.

My ponzi just paid 3 roi for my sons, 21st for wife, 3rd for me and my foster son.

Stay away from ponzi because you might forfeit your capital. Grow muscle for mind before you join the scheme

emmanuelewumi:



It is a game, they knew it would crash but they hope to cash out before the collapse. Some are lucky to cash out but 90% will eventually lose money

plus greed makes those who cashed out return... Try again

Sir thank you for teaching me how to do stocks properly.
I made 17% this year following your instructions here.

(though I regret leaving early)
Thank you very much for your free tips here.

You make it easier than Warren Buffet does!

jajeri3216:


Poor fiscal management indeed can lead to inflation but the core of devaluation in Nigeria is solely over dependence on imports and little inflow of forex due to over reliance on crude oil for fx.

A tendency to keep the currency strong is built into the structure of African economies. ... Governments fear depreciation because they depend on imported capital to finance infrastructure projects; a weak currency forces them to raise more revenue to pay back foreign debts.

Extractive vs inclusive economies

Lord knows it will reach 18% before I will buy tbills again

Olaide1295:

So the solution you are suggesting is to create an artificial Naira scarcity by increasing rates of Tbills?
What happens when those bills mature, you were trying to reduce supply but now have increased it?

He needs to learn that.

Removing naira from circulation via T-bills doesn't reduce the volume of naira in existence.

When you mop up 5trn at 18% today, next year your problem increases to having to mop up 6trn when the bills mature, 5years' time it will be 11.4trn hanging over your head.

Whereas if you instead mop up thesame 5trn at 0.3% next year, it still just 5trn you have to mop up, 5 years's time just 5.08trn.

awesomeJ:


He needs to learn that.

Removing naira from circulation via T-bills doesn't reduce the volume of naira in existence.

When you mop up 5trn at 18% today, next year your problem increases to having to mop up 6trn when the bills mature, 5years' time it will be 11.4trn hanging over your head.

Whereas if you instead mop up thesame 5trn at 0.3% next year, it still just 5trn you have to mop up, 5 years's time just 5.08trn.

The people in government are very lazy thinkers and very unproductive. What happens to using the moped up money to invest in real sector.. build infrastructures and cause employment...
Sorry I forgot, any plan to do that will be swallowed up by corruption..

Now they are pushing it to private sectors to move the economy...This lazy dullards will sit and make retards policy to stiff them.... An economy that's so volatile coupled with unscrupulous elements that's ready to frustrate your efforts until they get settled/bribed ...which private or foreign investor will want to commit so much on such government...

Their greed seems to have no end...

I repeat until we have a president that's ready to make a bold moves..open him/herself to the rule of the law. Sacks incompetency.. I strongly believe every others will align...

We are no more in cycles... we seem to to be projecting downward while they have accumulated so much foreign notes to migrate themselves and family...

I'm so pissed off with the way the country is going...

RealityShot:
plus greed makes those who cashed out return... Try again

Sir thank you for teaching me how to do stocks properly.
I made 17% this year following your instructions here.

(though I regret leaving early)
Thank you very much for your free tips here.

You make it easier than Warren Buffet does!

I want to venture into stocks. Is there a thread here on nairaland where I can learn the basics?

Grupo:


I want to venture into stocks. Is there a thread here on nairaland where I can learn the basics?

https://www.nairaland.com/1131485/nigerian-stock-exchange-market-pick/6102

I hope I dont get banned for this.

I don't really think the CBN should bother much, if at all about rates in the street market, as long as critical importers are funded at 386,

Deals on the street market are about willing buyer, willing seller.

One thing I think is due now is the reopening of the borders, those rice farmers have not utilised the policy in the nation's economic's interest, but rather their personal gains.
They've done not much to improve quality but rather push price up.

Let the government reopen borders, even if it's just for 6 months, there should be a decline in food prices if they do this.

Now other components of the rising inflation are hikes in electricity tarriffs, and fuel price. Their impact on the inflation figures should wane by next year, since we don't expect another big hike on them-at least on electricity.

For the locally produced items, I think their prices may also drop if imported items like rice and wheat that have gone beyond reach due to order closure now become cheaper.

Overal, within 2 months of border reopening, inflation should begin tapering by 20-50basis points monthly.

RealityShot:
plus greed makes those who cashed out return... Try again

Sir thank you for teaching me how to do stocks properly.
I made 17% this year following your instructions here.

(though I regret leaving early)
Thank you very much for your free tips here.

You make it easier than Warren Buffet does!

17% between when and when? What did you buy? At what price did you buy, at what price did you sell?


What are you doing with the proceeds of the transaction?

handsomebolanle:


The people in government are very lazy thinkers and very unproductive. What happens to using the moped up money to invest in real sector.. build infrastructures and cause employment...
Sorry I forgot, any plan to do that will be swallowed up by corruption..

Now they are pushing it to private sectors to move the economy...This lazy dullards will sit and make retards policy to stiff them.... An economy that's so volatile coupled with unscrupulous elements that's ready to frustrate your efforts until they get settled/bribed ...which private or foreign investor will want to commit so much on such government...

Their greed seems to have no end...

I repeat until we have a president that's ready to make a bold moves..open him/herself to the rule of the law. Sacks incompetency.. I strongly believe every others will align...

We are no more in cycles... we seem to to be projecting downward while they have accumulated so much foreign notes to migrate themselves and family...

I'm so pissed off with the way the country is going...

Study the ev sector(China, us, Europe) and how it's developing , you'll understand how policies, innnovation, cheap credit and the stock market can increase economic growth.

What I'm i saying the government doesn't have to really even do much, just persuade cbn to lower credit rates, change their policies to support economic growth( eg borris Johnson's new policy on ev seeks go full electric by 2030, ciic an innovative ev company is stepping in with billions of funds in Investments) the private sector will take it from there.

emmanuelewumi:



17% between when and when? What did you buy? At what price did you buy, at what price did you sell?

What are you doing with the proceeds of the transaction?

Lol...
I bought UBA at N5.05 in April and sold at N6.20 in July

Looked like a sound collection of N1 dividend to me then but chai...

If I tell you where half of my capital is now, you will flog me well well! Lolzzz

I am waiting till next year with the remaining capital and anything I can add.
I had made so much loss back in 2008 that I swore never to do stocks but.. You...

Thank you Sir!


(what you didn't reveal in your posts is that there is a certain time to buy great stocks yearly to maximize dividend profits for dividend investors)

ositadiima1:


https://www.nairaland.com/1131485/nigerian-stock-exchange-market-pick/6102

I hope I dont get banned for this.

Thanks.

jajeri3216:


Study the ev sector(China, us, Europe) and how it's developing , you'll understand how policies, innnovation, cheap credit and the stock market can increase economic growth.

What I'm i saying the government doesn't have to really even do much, just persuade cbn to lower credit rates, change their policies to support economic growth( eg borris Johnson's new policy on ev seeks go full electric by 2030, ciic an innovative ev company is stepping in with billions of funds in Investments) the private sector will take it from there.

Not far from what I said... Nigerias many policy is selective

Grupo:


I want to venture into stocks. Is there a thread here on nairaland where I can learn the basics?

if you follow pa emmanuelewumi posts from January to March

You don't need to know much else.

There is a picture he summarized his technique in... IT'S BELOW
YOU ONLY NEED NUMBER 4 TO MAKE GOOD PAYOUTS

have fun.

(in stocks, learn one style that works and you are comfortable with AND stick to it only)


Use this website to find dividend stocks for the last 5 years
https://nairametrics.com/2020/11/09/list-of-dividends-announced-in-the-nigerian-stock-exchange-in-2020-november/

TransAtlanticEx:
There are better ways to curb the naira than paying high interest in the debt market.
Also,a 3 year delay in naira depreciation will help a lot because by then Dangote refinery must have come up and crash the import of petrol and its derivatives,hence more fx to defend the naira.
What I would do if I was CBN governor is give you high interest rates now to tie your money for 3 years so that by then Dangote and other refinery must have started operation and i must have built my reserves very well,
I will continue build my reserves for 2 more years and stop paying you high interest and also not defend the naira immediately so that the naira you made from my time of desperation(high interest payment which is now) will be wiped by inflation(this is what happens to all the "free naira" you asked me about)
Then I start defending the naira after you(debt buyers) must have gone wretched
Have I not solved your problem like this?

Delaying Naira Devaluation is what the Government is doing now, there are multiple exchange rates. But are the forex reserves increasing?

Funny that this your strategy seems to be what Emefiele has done since 2016. He delayed devaluation, increased reserves, encouraged foreign investors who are now stuck.
What do you mean wiped out by inflation? The Naira is still with them and they are looking to take it out now.

Olaide1295:


Delaying Naira Devaluation is what the Government is doing now, there are multiple exchange rates. But are the forex reserves increasing?

Funny that this your strategy seems to be what Emefiele has done since 2016. He delayed devaluation, increased reserves, encouraged foreign investors who are now stuck.
What do you mean wiped out by inflation? The Naira is still with them and they are looking to take it out now.

The delay can only last for so long, with time the bubble will pop! why save in naira when there is a known store of value with a final supply cap of 21M

Grupo:


I want to venture into stocks. Is there a thread here on nairaland where I can learn the basics?

let these projections guide your profit targets...
As you select dividend stocks

RealityShot:
if you follow pa emmanuelewumi posts from January to March

You don't need to know much else.

There is a picture he summarized his technique in... IT'S BELOW
YOU ONLY NEED NUMBER 4 TO MAKE GOOD PAYOUTS

Good have fun.

(in stocks, learn one style that works and you are comfortable with AND stick to it only)


Use this website to find dividend stocks for the last 5 years
https://nairametrics.com/2020/11/09/list-of-dividends-announced-in-the-nigerian-stock-exchange-in-2020-november/

Thank you.