₦airaland Forum

TransAtlanticEx:
nafex has been turning over since,so it isn't new.
It's the retail segment that is a problem,and we both know $50mln will make very little difference in that market.
This is the reason why rates are going up again,cos BDCs know that intervention is almost nothing to them in their own end.
Monday shall tell...

We don't both know that!

What's the maximum we ever had injected into the BDCs from 2017 through 2020Q1?

40,000 USD weekly, It was mostly 20,000 weekly per BDC, and that was enough to keep the calm.

Plus over 90% of nigerians actually don't have enough naira to buy up to 10,000 as we speak.

There are those who can afford to, but have funds tied in properties and other illiquid assets. There are also others who can afford it, but already hold their savings in foreign currencies, whereas, there's the vast majority who have dollar purchase as the last thing on their minds cos all they want is a way to pay the next rent and keep the kitchen stuffed.

So in the end, there's at most say 1,000,000 speculators having an average of NGN 1,000,000 to speculate with. That makes 1trn tops, about $2.5bn, less than 8% of current reserves.

Speculators will certainly run out to f available naira before CBN burns 10% of reserves.

Plus there's still another tactic of offering t-bills at 14% discounts again, that will make quite a number of folks decamp from the speculators bunch to the t-bills 'geng', and some will even liquidate their current dollar holdings to cash in on juicy t-bills rates, making dollars even more available.


Ultimately, I wouldn't advise anyone to bet against the fortunes of the naira as it's currently a currency that is blessed.

TransAtlanticEx:
Injected 100m in what segment of the market?
That matters a lot too.

I Read about the $50m on Monday that's, and another $92m turnover at NAFEX yesterday with a menttion that the nafex turnover increase was due to the fact that the CBN was starting to clear FX backlogs gradually.

Retail segment as we expect should be getting $50m weekly beginning Monday.

https://nairametrics.com/2020/09/04/fx-turnover-spikes-140-at-nafex-market-as-cbn-moves-to-clear-backlog-of-demand/

TransAtlanticEx:
Can you back the bolded wCan you back the bolded with some data?

Well, it's not hard to deduce. For one, CBN has injected at least $100m in liquidity this week? and contrary to your expectation, reserves are still up week to date.

einsteine:
For those who want to speculate on USD, I would advise them to buy at any price less than 440 and sell at any price above 460. The value of the Naira lies between this bid-ask prices

First, speculating shouldn't be suggested to anyone. Hedging maybe, but speculating, No!

Secondly, buying at 440, you're CERTAIN to lose 10%. Selling at 460 is a wish that may take years to realize.

USD will be available at sub 400 before long.

Don't take uncalculated risks in a hurry!

TransAtlanticEx:
Actually yes.
I'll only intervene when things are going out of hands,like say beyond 600.

Considering the objective of price stability, that would make you a bad governor.

TransAtlanticEx:
No,I will float the naira and let the market determine its price and merge all rates.
Enough of socialism.

Define what you mean by float, cos some of you will be there quoting theories you don't understand.

By float do you mean you wouldn't sell any forex and let everyone go source his forex even if at 5000 per dollar, nothing concern you, or do you mean you will be selling but only at the same terrible rate of 5000 per dollar that aboki is selling. Now you pay minimum wage of 30k to mama. Mama buys 2 spaghetti for 4k each, 1 loaf of bread and 2kg of rice. salary don finish. How will a portion that should last her 3 days ever get her through the month? what would you have gained as a CBN governor bringing Zimbabwe and Venezuela on your innocent citizens because you're applying theories out of context.

chigo4u:
The dude to be making emotional analysis like ahib.
This was the same guy who said the dollar will crash from 360 to 340 before this year, coming now to deny the claim. I remember when we had this argument previously, he wants me to mention the post so he will say it’s because of covid19.

What's your stress now? Dig out the post you're claiming? perhaps you've searched fruitlessly. Wonder why you'd expect to ever find something that doesn't exits.

Breathe heavily often. It helps to rid yourself of unfounded anger.

TotoNaRubber:
The N470 blackmarket rate is more feasible to get capital and interest out before another devaluation. Mallams source forex through individuals and businesses too.

Unfortunately the N380 from the CBN is not guaranteed, you could be on six months waiting list and another devaluation catches up with you there. There is a blackmarket in the I&E window selling $1=N400.

So, it was you who counselled them in 2016 to wait for dollars at 360? They've been there before. They know they made a good choice not to buy 520 dollars and it paid off. They have their options well weighed.

Why are we even arguing this. if the FPIs thought your option was the smarter one, they would have chosen it now wouldn't they?

TransAtlanticEx:
Does this "preference" not make form M useless at this point?
Must everyone do basic ammenities business to be termed genuine?
This so called "preference" is why dollar shot up in the parallel market.
Because all those not on the "preference" form M list turned to abokis.

The preference doesn't make form M useless. What it does it make sure the limited forex is optimally allocated to keep basic items within the reach of the average nigerian.

Are you saying that knowing fully well that our FX earnings have been significantly impacted, you as CBN governor would have paid the little available FX to fat wall street guys and wine importers, so that people now need N 1000 to buy bread or N 5000 for a sachet of paracetamol?

Is that what you would really do? Maybe you should seek Venezuelan citizenship then. What you desire is readily available there.

TransAtlanticEx:
So if you are the head of one of these companies,you'll shutdown the company,chase all the workers,cause scarcity of your products in the markets which might make your competition overtake you,default all your loans,risk damaging your machines due to idleness,destroy time value for capital all because because CBN say you should wait,they will give you dollars at 380 only God knows when,where abokis are begging you to come and buy at 470 and continue your business in peace?
You're a very brilliant person!

I thought you were referring to "imported finished products" now, so what's it with damaging your machines, laying off staff and those stuff you listed. Aren't they things that should affect local manufacturers?

I remember you or maybe the other moniker said you weren't arguing about locally produced goods. You said it was imported finished items like Mo'et.

Stay on one lane now.

TransAtlanticEx:
They are not on any ban list,whether CBN or customs.
If the CBN is now doing priority or no priority,then why are we having this form M conversation?
Isn't it glaring enough to you that it's useless at this point hence almost everyone is turning to aboki?
That is the reason why the parallel market is exploding.
Because there is no need of hoping to get dollars at 380 via form M that might take you one year to get whereas aboki will sell 470 and give you today.
So many people are ditching form M and turning towards aboki.
It's that simple really.

Manufacturers of essential items have been getting their genuine FX needs met via form M at 380. The fact that those importing wines and other items that aren't as essential haven't been getting as much funding doesn't mean the CBN is at fault. When your resources (FX in this case) becomes limited, it's only commonsensical to push luxury items down on your scale of preference.

TransAtlanticEx:
Who said it belongs to northerners?
I simply said northerners supplied it to the owners.
And the same way they accumulated $20b via trading is the same way they'd supply the needs of forex repatriators and forex needs via trading.
Igbo will import/smuggle the currency in,sell to aboki with his limited funds to peddle to you.
If you want $1m,they sell to you multiple times or refer you to their oga for negotiated cuts if they trust you enough,its that simple.
No one will go to an aboki to get $100m at once,its a repeated and recycled daily process.
You are even really ridiculous to think that,even CBN don't sell some kind of funds to a person at once.

So which will end up being better, waiting 3 months to get at 380 from CBN or buying at 470 from abokis who will still take months to supply you since they have to sell in bits.

TotoNaRubber:
Investors invest to gain, that"s it right there ; see your example someone invested $5 billion and waited 3 years and he wants to take out his capital and interest upon maturity and he can only get $4.4 billion, over the last 3 years he has been servicing the probably loan he used to invest in Nigeria only to be told at the end of the investment cycle take $ 4.4 billion or leave it meanwhile he was promised to get more than $5 billion at the start of the investment, i think it is a typical example of frying your own balls as eggs, it doesn"t feel good.

Unfortunately that is the new Nigeria, unstable economy that can wipe your interest rate of 3 to 5 years within 48 hours.

No the FPI is not losing anything. He would only lose if he followed your suggestion to go buy aboki dollars at 470. Since he knows better, he'd rather keep the funds invested at4% yield and wait to repartriate at 380, and that's exactly what they're doing.

NL1960:
That is your loss which is the risk you have to bear by using migrating birds instead of the prescribed channel.

I see.

NL1960:
That is your loss which is the risk you have to bear by using migrating birds instead of the prescribed channel.

I see.

TransAtlanticEx:
But they are not 38,000.
They are heading for 50,000 as we speak
Moet hennessy increased their prices by 19.35% about 3 weeks ago,but naira was devalued how many percent again?
So where is the extra money going to?
Doesn't this tell you these people aren't funded enough by the CBN and make up for the extra from aboki?

The exchange rate effect will push it to 38,000. The higher logistics cost due to fuel price increase may add another 1k, Maybe VAT adds 500 and the fact that excise/customs duties will now be paid at 380 as against the old 320 could also add another 500 or 1k. So the price hikes should not have gone beyond 40k from the 36k. Going to 50k may mean people are hoarding. Plus if this situation is peculiar to imported wine products, Like I've said earlier, we're in a time of limited forex resources, and so even though I don't know if or not they're restricted from FX funding by the CBN, I do know for sure that they are not on our priority list for now, and so they may be sourcing FX at 470. Their trade is not one that the Nigerian masses depend on to survive.

To the guy asking who supplied the billions in dorm account:


The $20bn dorm account don't belong to the abokis, and they weren't funded all at once. You're talking years of accumulation that belong to millions of bank customers.


Now an aboki that trades with $10,000 worth of funds (3.8m) can end up supplying you with even $500k over years. because he's really just trading. He takes his 4m buys dollars, sells to you and collects his 4m back. He can repeat the cycle 50more times and he would have supplied you $500,000 but that doesn't mean he ever had even $20,000 at any one point.

TransAtlanticEx:
shhh...don't make noise,bring the demand first.
Who sold most of the forex being kept in dorm accounts or in foreign stashes taken out of Nigeria to Switzerland and some islands?
No use yourself judge other people pocket.

The $20bn dorm account don't belong to the abokis, and they weren't funded all at once. You're talking years of accumulation that belong to millions of bank customers.


Now an aboki that trades with $10,000 worth of funds (3.8m) can end up supplying you with even $500k over years. because he's really just trading. He takes his 4m buys dollars, sells to you and collects his 4m back. He can repeat the cycle 50more times and he would have supplied you $500,000 but that doesn't mean he ever had even $20,000 at any one point.

TransAtlanticEx:
It seems you are very slow in the head.
I said why are prices of imported,finished items that arent in the CBN or custom ban list increasing despite form M.
It is to tell you that they are finding it difficult to get dollars from the same CBN and are now patronising aboki,ode.
Why should knorr and maggi prices increase,are they imported?
Your brain is dead,no offense.

It's not me you should be angry with when you're not able to comprehend simple maths. And I don't think it's as much about your inability to comprehend as it is about your choice not to.

Because even my nephew in JSS3 is smart enough to realize that for an " imported,finished items that arent in the CBN or custom ban" that costs $100, The Price was 36,000 and now that forms M are funded at 380, it would naturally have to go up to 38,000.

Now as simple as this explanation is that I didn't even have to make it, you will still confuse yourself. I think you should save yourself the embarrassment. People are reading these posts now, and more will do in the future. You really don't wanna portray yourself as being terribly dumb do you?

TransAtlanticEx:
lol another clown,bring the demand first and be ready to pay the price,you'll see for yourself how many notherners(not entirely northerners anyways,igbo guys are the ones smuggling in the fx,northerners do the peddling part in the streets under hot sun) have money

Tell me how many of your igbo boys and northerners have 400m in liquid cash to trade dollars with.

There are times that to buy just 5m worth of dollars, the aboki would have to meet 3-4 others to raise just 5m.

There are definitely thos who have the 400m or even more. Buy you'll be totally wrong think they are anywhere near 5000.

TransAtlanticEx:
Stop giving oil and gas examples,its a very stupid example to make because they are subsidised and the organisation importing it is a dollar earning one.
Companies don't just increase pricing(they have they pay labour in naira,run factory in naira and have some materials they purchase localcompetitors and customers to keep their loyalty),especially when they have ways to mitigate it and running a factory locally is one way to hedge against forex hike(becausely).
Nestle will absorb the extra 40k per ton increase and remove it from its profits,unless it becomes unbearable in the long run.
All these textbook gobbling children sef.
Go to the supermarket and tell me whether maggi,Knorr and co have increase price.
Also in that same supermarket,check the price of moet and chandon nectar imperial.
Tell me which increased and which didn't,mugu.

You're on your own o.

You said you couldn't comprehend why prices were on the increase despite form M..We helped you, and instead of humbly educating your ignorance, you're choosing to be angry.

Now when you ask why knorr prices and all haven't increased, are you not contradicting yourself? Were you not the one saying Form M wasn't real as prices were increasing? Now we explained to you why, you're ranting nnpc is forex earning. LANDING COST OF FUEL IS HIGHER WHEN EXCHANGE RATE IS 380 THAN WHEN IT WAS 306, BECAUSE THE PRODUCTS ARE BOUGHT WITH DOLLARS. perhaps the caps will help you understand now.

TotoNaRubber:
Multiply the $5 billion due for repatraiation by N475/ $ and remove it from the economy and see if naira will trade at anything less than N1000 per dollar.
In Q2 of 2020, no foreign investor invested in certain fixed income securities due to negative interest rates, it is not a bad thing per say but that gives you an idea what foreign investors are currently doing (they are looking for exit options).

At some point Nigerian govt will only owe it's citizens with the look of things, Venezuela will start looking good in our eyes.

You don't understand the situation we'll enough.

The $5b are currently in naira assets and cash. So they bought it in at 360, and it was 1.8 trn. They've earned perhaps 13-17% interests, and the total value of their holdings is now about at about 2.1trn.

So Their choice is to either sell this at 380 and get $5.53bn representing a 10% gain. and there is actually a market big enough to meet their demand, or they choose to sell at 475 like you're suggesting, and they only get back $4.42bn representing about 12% in losses, and abokis in their wildest dreams won't be able to meet their demand. 2.1trn spread across 5000BDCs is about N400m. How many abokis have 400m?

ahiboilandgas:
clear articulate points......i suspect say u be cbn staff .........enough data ..

I work in their prayer department to control things that are beyond them. Moving oil prices from $15 for instance.

chigo4u:
Lol.. you can’t even remember what you said a little over a year ago and you are back with new theories lol

Don't lol anything.

I don't remember cos I never said it.

You claim to read it from me, so it only makes sense that you present your proof, otherwise, admit that you've wrongly said, and move on.

chigo4u:
Lol.. you can’t even remember what you said a little over a year ago and you are back with new theories lol

Don't lol anything. I don't remember cos I never said it. you claim to read it from me, so it only makes sense that you present your proof. Otherwise admit that you've said wrongly and move on

NL1960:
Look for any of the migrating birds from Nigeria to the country of the offshore bank and tie the bag of $$$ to the bird and tell the offshore bank to go to their nesting place for pickup.

what if someone else gets there before my offshore bankers and thinks he's got a windfall? What happens to my sweet $$$�

TransAtlanticEx:
You are the one who don't understand .
Does Nestle import finished products in the country to resell or import raw materials and produce here?
So why would their prices hike immediately due to forex shortage?
Inflation reflects immediately on imported finished goods while locally manufactured goods get inflated afterwards,even though cost of imported raw materials have increased.
Of what essence is getting dollars at 380 but you don't get enough when you can always go to your nearest aboki for unlimited supply at higher prices?
If companies all wait for dollars at 380 in these periods,they will close shop.
Get that into your head.
And why would you use fuel as an example when NNPC is a dollar earning company and is the one importing the fuel?
Abi you expect them to lack forex too?jeez!!

Appears you just like long talk. Say they buy cocoa beans at $2000 per tonne. Their landing cost was 720,000 per tonne when they bought at 360. Now it's 760,000 because they're buying at 380, and it's so hard for you to comprehend that mild price adjustments are necessary?

Now in March, Diesel was probably selling at 2$ a gallon. exchange rate for fuel impprt was 306, landing cost would be about N612 per gallon. Today oil prices have recovered, diesel probably sells for $2.5 a gallon and exchange rate is now 380, the same quantity of diesel now cost N950 per gallon. What do you think happens to cost of transporting finished goods for most of these manufacturers? Would they not have to have mild price adjustments to compensate their higher operating cost?

Except you just want to argue baselessly, the points are quite comprehensible.

TotoNaRubber:
The amount of Naira chasing dollar will always be excess.

This is also wrong. Please always say only things you know. How much do you think system liquidity is as we speak? perhaps just 800bn or less, that's just about $2bn meaning that even if the CBN offered just $2.5bn for spot sales today, it won't be able to sell it all. The vast trillions are locked in stocks, bonds, commercial papers and CBN bills, and as a holder of such instrument, you can only offer them up for sale, there's no guarantee you'll get ready buyers, and even in cases where you get, the net impact on system liquidity is still zero. I sell 1m units of NESTLE stocks and 1,200 a unit. That will give me 1.2bn in fresh liquidity, but at the same time, it drains 1.2bn of liquidity off the buyer so the net position of the banking system liquidity remains flat.

TotoNaRubber:
If we subtract 36-5 = 31 billion usd. If Nigerian govt honor these genuine transactions, we should be looking at $1 = N1200. Foreign investors have an exit period, they have tried legally and it bounced, surely they will be going to Abokis and we as a nation are back to square one.



The foreign investors are still in the market waiting for times like this to mop up any cheap dollar either via CBN or mallams. The amount of Naira chasing dollar will always be excess.

When CBN starts selling dollar to BDCs next week, watch the rate N386/$ specified by CBN will never happen, it's just paperwork, when you go to mallams to buy they will say they dont have dollar meanwhile the dollar is being sold backdoor at N47something.

So in your opinion 5bn from 36bn would crash rate to 1200? Why did rate not crash to 4000 in 2016? because there was $4bn backlog on $30bn reserves. If someone had followed your analysis to buy at 530 then, 4 years later has he broken even?

chigo4u:
Please go and check your posts from when Emefiele was reappointed, you seem to forget easily. And don’t even try to use the covid as an excuse, what is happening to naira will happen sooner or later covid or not. It’s not rocket science

You're the one referencing a post that doesn't exist so go and check yourself and post here.

I've seen it a few times though when people will assume you said something you never said. It's only in your head, you didn't hear it from me.

Emefiele was reappointed around late May 2019, that should help guide your search.

TransAtlanticEx:
What fuel?
That is NNPC affairs and you don't expect them to lack forex to import fuel,so I wonder why you'd make that kind of example.
I am talking of normal businesses not getting enough forex with no damn form M,forcing them to aboki.
That is why prices of goods are going up and services might follow suit.
So enough of this your genuine people,form M,form A stories.You arent talking to children.

You don't understand the simple explanation.

He said exchange rate and VAT hike are reasons for price hikes by players who get funded through form M. That should be easy for you to understand.

Check the major players NESTLE and the rest any price hikes has only been mild to reflect the fact that they now get dollars at 380 instead of 360. The mild increase is expected.

einsteine:
The point is flying over your head.

Let me try to be clearer: if people are willing to buy diesel at 300 naira per litre and a father Christmas somewhere is selling at 200 naira (delivery inclusive), what do you think is going to happen? Won't people who have access to that Father Christmas buy and then sell at the proper price? In such a situation, what is better to encourage the Father Christmas in such foolishness or to tell the Father Christmas to allow the market to operate at the proper price?

If you still don't get the point, then sorry that's the best I can explain

Your anlogy is faulty.

In this case, the Father Christmas is only selling at 200 to people who can prove they genuinely need his diesel because he wants to make sure diesel supply doesn't cause unnecessary hardship to people and their living standards.

If you manufacture basic necessities for Nigerians, come and the CBN will fund your forex needs at a rate that implies you wouldn't be passing unnecessary costs to ordinary Nigerians.

If you consider that "foolishness", then we can only wonder what your thinking about the welfare of the Nigerian masses is.

Cyberknight:
Lol.
Are you saying that it's only an external shock, the coronavirus pandemic and its effects, that brought Nigeria's currency management to the sorry state it is in now?

FYI, the naira started dropping in January.

Secondly, speculators don't need an external shock to swoop in to attack, they just need somewhere where structural conditions favour their activities, and Nigeria is one such prime location. No external shock was present when the pound was removed from ERM in 92 and interest rates went up and the UK crashed into recession.

I bought dollars at 362 in late January. Maybe some people even bought at 370 earlier in January. But all through February and the first half of March, I was buying at 360, so your reference to January doesn't hold.

Naira only started sliding after the terrible 33% oil price single day loss on March 16, and it became worse only after the CBN suspended sales to BDCs so yes, without the pandemic, things would have been mostly normal.

And saying speculators don't need external shock to do the things they do. I don't argue with that, they can do their speculating all they want, but without the pandemic, it would have led to sustained frustration as it's been since 2017.