₦airaland Forum

TotoNaRubber:
We kept on telling you dollar was not dropping to the N400s due to the real facts but you keep pulling up statistics contrary to the facts.

The last drop at N435 is the least it will ever go throughout the history of mankind. Let's start facing realities.

What facts?

Meanwhile Brent now above $48, We expect the first weekly close above $50 since March.

Don't consider this in your own reality, let abokis price be your only reality.

It's your money.

einsteine:
Yes, you were wrong.

You analyzed based on your wishes than based on reality.

You don't know that! And so you shouldn't say.

The fact that a forecast turns out wrong doesn't mean it was done based on wishes.

So folks who said it would take at least 12-18 months for a vaccine said that based on wishes too, or expert models back in May, that said US covid deaths would be between 70-120k deaths were wished too.

What reality are you talking about?

If you think buying dollars at 480 is the reality, March on with it!

I overestimated the impact of the $10,000 weekly sales.

However, at what rate can I buy dollars to hold?

Sub 400.

Basically cos, I wouldn't want to pay too much premium from the rate CBN offers.

When do I see dollar reaching this level, I.e naira strengthening this much.

1. Oil prices climb back to c. $60;

2. CBN consistently grows reserves by c. $500m monthly.

3. Job conditions in US and Europe improve, to enable decent remmittances by resident Nigerians there.

4. International flight volume at least for arrivals reach 80-90% of the 2019 levels. Implying more remittances to street traders.

If things go well with vaccinations, maybe Q4 2021.

Also, I said dollar will be available at sub 400 before long.
I probably had before year end in mind.
Apparently, I was wrong too.

Also, I said dollar will be available at sub 400 before long.
I probably had before year end in mind.
Apparently, I was wrong too.

Also, I said dollar will be available at sub 400 before long.
I probably had before year end in mind.
Apparently, I was wrong too.

ojesymsym:
Sir, you gave us a good analysis sometime ago about the direction the dollar was going, the present reality seems not to have followed the model you came with?

I think emmasoft or someone else said to buy dollars at 440 and sell at 460.

I said it was a bad idea as it would lead to losses.

I was wrong!!! VERY WRONG!!!

Lazyyouth4u:
Nope. OPEC agreement actually regulates production/output. Not exports.

This is what I think it is! It's the production not just the exports.

Regulating only the exports would have been better for us.

But Barkindo should be able to push for things in our favor now.

Otherwise, the only real advantage of the Refinery will come down to eliminating shipping costs to a fro on the circa 450k bpd that we consume, and reducing incidences of looking for buyers for our cargoes.

This is why I said we need to discount some uncertainties around the overall impact of the Refinery on our FX position.

And about price cap, The government didn't put it because importers were inflating landing cost, it was put cos they were subsidising to "help" masses.

Landing costs are not actually what get inflated, rather it was the imported volume.

I mean if the cost of refined PMS was $500 a ton in the international market, the government can determine your shipping and related costs, so they will even be the ones telling you what landing cost should be, or at least give a very narrow band.

What those marketers would typically do was claim extra on their imported voulmes and fatten their funny cheeks unnecessarily

TransAtlanticEx:
Along the line credit always enter @ the bolded,reason why cash Is better.It gives the other person more options incase one decides to go out of line or even experience some sort of breakdown.
Why do you think FG gave marketers a price cap?don't you think it's because they thought they were inflating their landing cost so as to chop excess subsidy?
Like I said,why would the NNPC want to supply petrol too when we have enough marketers?
What does it want to achieve with that if not to fight subsidy scam?

NNPC has PPMC. PPMC exists to market petrol and similar products. They'll be a player like others. It was like that before NNPC became sole importer.

TransAtlanticEx:
why would NNPC even want to do that?So that they can continue with subsidy?because that's the only reason.
And this your swap method will still be futile because crude supply won't always equal value for finished product all the time,which will give room for debts and we all know how lackadaisical government agencies can be with repaying debt.No capitalist wants this.
If they want to continue with subsidy by letting only NNPC be able to purchase from dangote like they are doing now with imports,then NNPC should pay cash and dangote should buy his crude cash too.
Also you can't have NNPC buying from dangote and still talk of marketers buying too at the same time because the only reason NNPC started getting involved with finished petroleum products was to eliminate subsidy scam.
So why would you want marketers to buy and NNPC buy too?what's the point?
It means the whole NNPC getting involved I'm the first place is pointless,since the marketers can still continue with their scams.
Why not leave marketers do their thing and eliminate subsidy once and for all?

The fact that NNPC imports doesn't mean it's exclusive to them.

In a deregulated market, there can be several players.

If we have a 60m per day PMS market, and NNPC supplies 20m per day, the other players have room to meet 40m of demand.

The oil importers were not actually stopped from importing. It was just that government fixed a price cap that was way below their landing cost, so they wouldn't. NNPC solely imported and recorded underrecoveries.

When the prices become market reflective, there will be room for NNPC and other players.

Then about crude swaps, your point about crude volume not being same as refined products volume is not an issue.

The typical contract will be like: give me $2bn dollars worth of refined products, and I'll give you $2bn worth of crude.

the $2bn crude could be as much as 50m barrels, while the refined products come in at just 30m, it wouldn't matter.

It doesn't have to be complicated.

It's like having a supplier to whom you're also a supplier, you guys can always work out ways to offset bills.

TransAtlanticEx:
Let them liberalize it ooo.
Subsidy will bring death to this refinery.
There would be lots of forgery and delayed subsidy payment that will kill the productivity of that refinery.
I don't even think dangote will accept that subsidy nonsense.

Why are you then quick to insult people in your comments?

You don't already have an idea how the refinery will supply? Should one then say you're.... too?

When you read threads with high school kids, you may expect exchanges like ones you initiate here.

But come on, this is supposed to be a forum for mature folks, why should it be so hard for you to do your part in keeping it as such

If you knew everything or expect everyone to have your same perspective, why come here at all.

The fact that we bring different perspectives on issues is actually supposed to be the beauty of our discussion.

People can disagree with you, it doesn't make them your enemy.

Just breathe real deep, relax, you could use the happiness.

I wonder how often you ever laugh or smile while interacting here. It should be more frequently.

#STOPTHEINSULTS.

Meanwhile, there are two likely arrangements when Dangote refinery becomes operational.

1. NNPC does swaps (crude for refined products.

2. Other marketers buy at market rates. Only difference now is shipping and related costs eliminated, and finance cost reduces mildly since order to delivery time gets shrunk significantly.

Olaide1295:
The beauty of free-market capitalism is that it is self-correcting.
I believe if the local producers of rice are really making abnormal profits. They will put more efforts into increasing supply. Other people will see the huge profits and enter into the same business.
This boosts local production and jobs. More importantly, when supply increases, prices will naturally fall.
Closing markets to drive down prices is not good. Seems to me like a temporary solution to a long-term problem. Long term solution is to increase local supply.

True. Very true.

Happened with garri in 2017.

When garri hit like 1000 then, more folks went into cassava farming. two years later in 2019, it sold for 400.

Hopefully, same thing happens with rice.

Lazyyouth4u:
It is not greed that is making locally produced goods more expensive sir. The cost of production in Nigeria is too high. Manufacturers have to buy generators and diesel, they have to move goods and raw materials in bad roads where these goods are sometimes stolen by highway robbers, trucks break down and have to be fixed all the time, workers are stealing from the company, interest rates are high, raw materials, machinery/plants and spare parts are imported with a devalued Naira, lots of clueless managers running companies because they are related to Oga, etc. Most importantly, economies of scale keeps foreign goods super cheap. Those countries produce so much of these commodities that the costs per unit naturally go down as they are spread over larger quantities. Naija businesses can not compete.

Overcapacity and oversupply in China (and even India) has led to a situation where some commodities can be shipped and dumped in Nigeria and other African countries (at costs that are still lower than Nigeria’s even with inclusion of shipping and duties) just for these Asian companies to break even.

For Naija made goods to compete, costs of production have to go down. Fix the power situation, road networks, crime, fx situation, lower interest rates and employ better staff and managers and the difference will be felt. I doubt that will happen in the next 5 to 10 years.

There's the greed aspect too.

How do we explain Dangote Cement produced here from almost free stones selling for 2800 per bag. They produce it here, transport it further to other west African countries and sell it there for about half the price? how does that make sense?

Check Dangote Cement results. They have close to 50 gross margins from their Nigerian operations, but less than 30% pan African. Why the disparity?

We used to produce about 6m tonnes of rice, and they managed to sell at 13000 per bag before border closure, now we're hearing that with all the intervention, the production is now over 8m tonnes, but price is over 25k, simply because borders are closed, so they see opportunity to exploit, because to them, this is the opportunity to make a killing let them make the most before government changes policy, that's their thinking when it should have been how to improve quality.
Thesame mentality that will make an elected official think about how to amass the most, cos na opportunity. let him amass before time runs out. when he should be thinking on how to best represent those that elected him.

The points you've raised about cost of production, economies of scale and all are very very true. But there's also a funny greedy/exploitative nature some Nigerians exhibit.

Apart from cost of fuel, and transportation, most other input for cement cost little or nothing. it shouldn't cost more than 1500 per bag.

There was a time during GEJ when. the government met with Dangote or maybe all cement manufacturers now, and they crashed the price from around 1800 to 1400.

ositadiima1:
Pasta is cheaper now o. About 4 cups of rice will be equivalent to one pack of spaghetti.

True.

Just that rice has more "subscribers"-young and old.

ositadiima1:
Lol, but why all this buhala about rice, is rice that tasty? There are many alternatives to rice like pasta, noodles etc. Beans is many times more nutritious and has several varieties.

the average Nigerian consumes 2-3 times more quantity of rice than beans.

It's been 3 months or longer since I for instance tasted beans, even then I ate it with rice.

While growing up too, we considered beans boring, rice was fun.

Then importantly, you can just sell beans without adding much value which Nigerian farmers are used to, so we're at or close to self ssufficiency, unlik rice that needs significant processing before it shines.

Akin3891:
Thanks, I asked cos I want to know when to put a halt to my mutual funds if it falls below 1.15%. I'm searching for a property worth of 15m that can fetch me say 1.5/2m annually, is this realistic?, if anyone have any ..kindly contact me.

Possible but not likely.

That's like 400k-500k per flat for a 4-flat block.

land alone in an area where such rents are prevalent should be near 10m

But with current T-bills yield, even 1m on 15m property is sweet, provided you can minimize vacancy rates and tenants' defaults.

I know one police estate in Idimu.

it's a condominium sort of. One block has 6 flats. Each flat used to be around 11m for a rental income of 400-500k per year.

There are about 500 units of flats, so I reckon it should be easy to buy.

Rental yield based on those figures is slightly above 4%.

Akin3891:
What is the current interest rate on savings acc?

1.15% pa
slightly below 0.1% per month.

RealityShot:
FOMO
Chai... IT'S in dictionary O!

I don't understand, like you were surprised to find FOMO in the dictionary?
The surprise shouldn't be enough to "chai" you now.
I hope you neva vex that I'm canvassing low rates sha. 18% may never come again.

TransAtlanticEx:
sure. And they've got a lot of naira courtesy dunb Nigerians

Not just dumb folks, greedy and FOMO ones too.

TransAtlanticEx:
Ponzi money doesn't disappear from the economy,it just move from one spender to the next,to the next,to the next and to the master conman who would want to move the funds out of the country.
So in essence,it helps depreciate the currency of the country as the master conman will want to move all that earned naira ashore,far away from EFCC reach.

Very true.

Maybe they're the ones pushing the high rates since they got the naira practically free.

ojesymsym:
In the line of the ensuing arguments, I am tempted to think that maybe ponzi actually help CBN mop up cash from the system even though it is not a deliberate policy. With lots of these cash trapped in these ponzi, CBN only needs to worry about the other cash not trapped there. lol

Only a tiny fraction-less than 1%.

Comeandcollect:
Opinion
An International Bank wants to borrow me N27. 5 million to repay over a period of 4 years (48 months) at 4 percent interest rate (N1.1 million interest only), I would like to know if this is a good offer considering the fact that they are giving me foreign currency and I will keep up repayments in foreign currency. Is this a good loan considering i would like to invest the money in Nigeria.

I do not have or know of any business that can generate sufficient income to service the loan so any business ideas is welcome too.

Thanks

It would have been good in the days of 182 day bills at 17%.
You'd just be buying t-bills and collecting interest to service the loan every 6 months.

But as with most business loans, you have to be sure of a venture that returns at least twice your finance cost ( that'll be interest + exchange rate differential in your own case)
for it to be worth your while.

4% is a good rate.

If you were in the US, it may be better to buy some healthy index Funds that you' LL cash in on buy Q1' 21. Because there's hope for more stimulus money that may push the market some 10,15%.

TransAtlanticEx:
I am not emotional,I will be very glad if dollar can hit 1000 after dangote refinery starts working so that I can easily mop up that your 5 trillion.
It's all part of the agenda.
Then after that I defend the naira.
And my target isn't only retail,it includes institutional too.

So why not let it go to 1000 today?


The only way this strategy works is if in that 3 years' time, your economy will have become self sufficient in most consumer goods, and actually become a net exporter, otherwise 1000 to a dollar at that time will basically make you need 2m to buy Keke napep. 3.5m Camry today will become 8m dicscounting old stock.

With stagnating wages, and common items getting more and more out of reach, you'll be an pushing economic disaster.

And I don't think there's any economy in the world that priotizes its instutional investors.
The interest/living standards of the common citizen should be at the fore of monetary policies.

That's why CBN will rather reduce bank charges to protect citizens rather than increase them to help banking institutions.

Just to be clear. I am only expressing my opinion on the subject. Your ideas are not at all less significant.

TransAtlanticEx:
Also,I won't stop tying down your money too till its starts operating because I have adequate mechanism to waste almost all of it when he starts working.
So you see,no love lost

I don't know how you run the maths o.

Put figures to this strategy of yours, let's see how it turns out, you end up with at least 1000 to a dollar.

Remember, it could just be 400bn of retail speculators money you're trying to mop, but when your t-bills go back up significantly, there'll be at least 10trn flooding in.

Your strategy will end up hurting way more.

Take a 10trn liquidity figure, and tell us how you can possibly avert dollar from reaching 1000 in 3 years if you keep mopping at 18%.

TransAtlanticEx:
Did I ever say mopping up liquidity with high yield was sustainable?
Did I not say I will give high yield till dangote refinery starts working?doesn't that tell you I know its unsustainable?
Or you just want talk?
I also provided how you can eliminate all the free naira you gave investors to restore economic sanity and eliminate false riches.

Not when you start giving it in 2016, expecting the refinery to kick off in 2019, and then the 2019 changes to late 2020, and now 2020 becomes whoever knows when.

As it is now, Doing above 5% will be unnecessarily desperate. And you have to discount a lot of uncertainties off of Dangote refinery's impact.

TransAtlanticEx:
This should teach people that curbing naira circulation is a way to battle inflation.
Make una dey learn.
If tbills was still high,the money he now uses to speculate would be blocked in the CBN.
KNOW THIS!!!

Nobody has said mopping up with high T-bills isn't a way of moderating inflation. IT IS!


What we're saying is, it's an expensive and unsustainable way.

As you have read from people's post on rice prices without customs restrictions, reopening the land borders will go a long way.

And like someone said-maishai I think that it's more effortless to grow rice in some places than here, maybe we'll have to settle with some level of imprtation maybe 60% importation, and set Target for reducing by 5% annually.

This should help moderate pressure.

Then 0.3% is probably now overly low, maybe 2-5% will be better.

kristien4:
Pls someone help me with the answer to this...on savings account that receive monthly interest, what is the maximum number of debit transactions allowed??

4.

Includes Airtime purchases!!

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.

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.

drealj:
Sorry Madam,permit me to say you are foolish .May be this will help

You don't need the permission, she doesn't need the insult.

Of all the people that have made fore comments, you think it's you who should now push insults?