₦airaland Forum

Agora is right.

However, the re-emergence of the fuel subsidy and refusal to deregulate the price means the government will spend close to 6 trillion subsidize the price.

The cost of subsidizing petrol goes higher the more the Naira depreciates as petrol prices are denominated in dollars.

The oil and electricity subsidies simply have to go.

Rich4god:
I hope the govt are not counting this as an actual revenue, cos gain through exchange rate is not a "real gain".

When does it becomes real?

grandstar:
Agora is right.

However, the re-emergence of the fuel subsidy and refusal to deregulate the price means the government will spend close to 6 trillion subsidize the price.

The cost of subsidizing petrol goes higher the more the Naira depreciates as petrol prices are denominated in dollars.

The oil and electricity subsidies simply have to go.

Since NNPC is the sole importer, I suspect the current intervention is via a rather static foreign exchange (FX) rate; that is, they are buying refined fuel at a static rate of N900/N1000 per dollar, which is responsible for the relative static price of petrol. If the expected appreciation of the naira in the near term reduces the exchange value to the 900-1000 corridor, the subsidy on Premium Motor Spirit (PMS) should be close to insignificant.

samsard:
I think you should be the one going back to school, chief.
How do you think the federal government and states have so much naira revenue now from FX earnings? It's the weaker exchange rate. They have a huge increase in wage bill coming in and it's going to be paid in naira while they have dollar debts/revenue and anticipate increasing FX earnings.
Significantly stronger naira now will slash FG naira revenue from customs duties and oil revenue. If anything, they'd prefer stability because a volatile rate is bad reputation.

So the borrowings is cos of much naira they have, right? If the naira is weak, it's becos the reserve they have is so meagre and can't support imports and other things done with Fx. Until exports increase and the nation is earning much foreign exchange, the naira versus other currencies can't improve. Why are weinsisting on domestic production in non oil sector improving? No government survives on fx parity as means of income. In fact it is shameful to sell foreign currencies to your citizens on profit. The only charges are that should be allowed is banks commission which in some cases abroad doesn't exceed 0 5%

Over here companies are closing and a government that knows what it's doing is making profit on fx. That is very shameful. How do you encourage production with that? How do you attract Dfi with such. Only a confused government will allow that.
In our company, we once sought guaranty of some sort from a fund company in Belgium. The interest we paid was so small that we were wondering how. This was not even a normal bank. They were ready to even do more for a company seeking to import goods from Europe.

It is shameful that a nations government will get into the mess of trading in foreign exchange for profit.

Yadid:
Phew! Could it be that the government is then enjoying this weak naira?

The governors are because they have more money to spend and nobody is monitoring them.

Vision101:
The governors are because they have more money to spend and nobody is monitoring them.

Hmmmm you're correct though. This is true