Falling Oil Prices!!! Naira Faces Devaluation Soon. - Politics - Nairaland
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| Falling Oil Prices!!! Naira Faces Devaluation Soon. by pendy79: 11:14pm On Nov 06, 2014 |
"Naira may be devalued as oil price slumps’ There may be devaluation of the naira as a result of the drop in global oil prices, Reuters reported yesterday. Nigeria, the continent’s top producer, relies on oil for only 14 percent of its gross domestic product (GDP) but crude makes up 95 percent of foreign exchange and about 80 percent of government revenues, both of which have shrunk rapidly as Brent crude lost more than a quarter of its value since June. Foreign portfolio investors fearing heavy losses on the currency have pulled out — the main share index hit a 16-month low and the yield on government bonds rose 10 basis points on Wednesday. The naira has lost around 4 percent this year, prompting the central bank to hold frequent additional dollar sales and lower the limit on banks’ foreign currency borrowing in efforts to prop it up. At around 167 to the dollar, it is well outside the central bank’s target band of 3 percent plus or minus 155 to the dollar. The last time it was in the target range was in late January. Foreign reserves fell rapidly from a peak of $48.9 billion in May 2013 to just $36 billion in June. They have since rebounded slightly and are currently around $38.3 billion. Despite these losses, analysts say that a devaluation before the elections, when President Goodluck Jonathan will seek a second term, would be so unpopular that it’s unlikely unless oil prices, now at $82 a barrel, tumble further and force the bank’s hand. “It will take some time of relatively low prices … before you see foreign reserves really being gobbled up, ” Matthew Searle, senior African analyst at Business Monitor International, said. “If oil prices fall further to the $60s or $70s a barrel, then the central bank will become the main source of dollars,” and will have to decide for how long it can keep up the fight. At what point it throws in the towel is hard to tell. Alan Cameron, London-based economist at Nigeria’s First City Monument Bank, thinks reserves would likely have to slide to close to $30 billion before a “last resort” devaluation would be considered. The last time the bank lowered its target range for the currency was in late 2011 after the naira came under speculative attack and tight monetary policy failed to defend it. “FISCAL EXPANSION” In addition to a weak currency, Nigeria faces an increasing squeeze on its government finances. Finance Minister Ngozi Okonko-Iweala told journalists last week that “Nigeria is not broke”, and analysts agree the country is a long way from struggling to meet its commitments. Yet a squeeze on funding is being felt. A source at the national assembly said money for projects is not being dispersed as easily as before oil prices fell. An official at a construction company, who declined to be named, said payments for a number of projects are in arrears. Oil analysts do not anticipate Brent recovering to over $100/bl with an average of $93.70/bl expected in 2015. A production cut by the Organisation of the Petroleum Exporting Countries (OPEC) seems unlikely. Oil producers have become accustomed to high oil prices, which have held largely above $100/bl since the Arab Spring in 2011, and all are having to adjust to the new climate. “There was significant fiscal expansion since 2010 as they were used to much higher oil prices, which makes the current price really problematic, ” Samir Gadio, Head of Africa Strategy at Standard Chartered Bank in London, said. “You really wonder how they will cope if prices stay at $85-90 a barrel and sustain the existing position,” he said, adding that even with prices at $100 a barrel it would struggle.” http://thenationonlineng.net/new/naira-may-be-devalued-as-oil-price-slumps/ |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by pendy79: 11:21pm On Nov 06, 2014 |
When you are hoping and wishing the worst is over then comes a BIG BANG. From a reserve of $48billion to less than $37billion in little over a year when crude was going on the high they kept stealing and spending, organising rallies and praise singing session over the country . Let see how long our reserve can sustain our trade and exchange need. Tighten your belts nigerians, jonaTAN is fulfilling his destiny to drown the nation but salvation isn't far away. 4 Likes |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by Nobody: 11:25pm On Nov 06, 2014 |
What do you expect from a mono-based economy ? We'd always be at the mercy of price determinant factors of that comodity. But wait oooo, what if the oil dries up ? 2 Likes |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by NwaNimo1(m): 11:27pm On Nov 06, 2014 |
Dis will affect the price of garri oooh, Hmm. |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by pendy79: 11:42pm On Nov 06, 2014 |
booscy: We are just a victim of a corrupt and ineffective government. We are caught in a web of power play of the USA colluding with Saudi Arabia to crash the oil market and its prices so as to weaken the russian economy. Saudi is in agreement cos they also want to punish the russians for their support of Syria and backing of Iran. We have spendthrifts in government who never saved for the rainy days. They have resorted to loan taking now despite the fact we had crude going over $163/barrel about a year ago. This clearly shows we never planned or learnt lessons over the years. Amaechi has been taking from funds he kept aside in a sovereign wealth account since 2009 which he is now dipping into it to augment the shortfall from the federation account since last year. Let the oil finish, you will see massive taxation. The minister already said so last week during her briefing. The economy is in tatters and we have a Harvard trained so called Professor as coordinating minister of the economy. Emir Lamido warned but some thought he was crazy and called him all sorts of names. It is a perilous times. 4 Likes |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by NwaNimo1(m): 11:48pm On Nov 06, 2014 |
pendy79: On a more positive note - At least we will be forced to learn how to economize, save and plan for the uncertain. Let the price crash further - you cant extort from someone who doesn't have money. Its the so called rich that will suffer. 3 Likes |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by pendy79: 12:32am On Nov 07, 2014 |
NwaNimo1: Do you really comprehend what you wrote? You did not save when you had excess but want to start to learn how to save when you don't have anymore to even sustain yourself |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by Nobody: 12:37am On Nov 07, 2014 |
expecting madam(Dr) Ngozi okonjo Iweala press conference...she will tell us 1naira is now 40dollars 2 Likes |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by Ozonna(m): 1:48am On Nov 07, 2014 |
pendy79: Abeg no vex. I still remember that Okonjo-Iweala literally begged for SWF. But NGF led by Amaechi refused. The blame should be on all politicians from Mr President to Governors. APC & PDP are guilty. And I respectfully disagree with you, Saudi is not colluding with USA to punish Russia and it has been said here in NL a million times. Oil price going down is all about: 1) Economic slowdown/fear of recession in Europe and this will ofcourse affect the world economy. 2) Shale oil boom in the US. 3) Reduced demand from China as a result of slowing industrial output. 4) Law of gravity  . What goes up must surely come down.6 Likes 1 Share |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by SLIDEwaxie(m): 2:21am On Nov 07, 2014 |
booscy:dubai only had oil for 25 years, but they had a leader with a vision..that makes the difference today... 2 Likes |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by oduastates: 3:10am On Nov 07, 2014 |
I have been saying this for 3 yrs. If care is not taken, the world food program will feeding y'all 1 Like |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by jejemanito: 5:36am On Nov 07, 2014 |
pendy79:Of course this is always an avenue to score miserable cheap points for you know who..... Keep wasting your time thinking nigerians are as gullible as you are Be it jonathan, buhari, obasanjo, atiku, IBB they all are birds of a feather!! PDP & APC are nothing but siamese twins of the same ugly mother!!! See his mouth like jonaTAN this jonaTAN that as if funds mismanagement started in 2011 mtchew 6 Likes |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by pendy79: 6:28am On Nov 07, 2014 |
Ozonna: |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by pendy79: 6:57am On Nov 07, 2014 |
Ozonna: Who told you the government didn't go ahead with the sovereign wealth fund? The nation's economic management is the sole purview of the federal government with madam iweala the coordinator. The state governors are lamenting and crying foul play for over a year now about illegal withdrawals from the treasury and reduced monthly allocation to them. The main issue the FG fought to destroy the NGF was to avoid further challenge by the amaechi led NGF then on the FG illegal withdrawals. Shale Gas wasn't just discovered last month or the month before. It has been there for months without affecting the crude price. If crude price is falling despite the fact we are entering into winter in Europe and America then you don't know anything about the politics of oil pricing. Go and check the period of global economic meltdown. Was it last month? Two months ago? It was 3/4years ago. Crosscheck the prevailing price of oil during those period and now that almost all countries of the world are no longer under recession except for france, Italy, spain and greece. Most countries affected by the slowdown are enjoying positive growth now and production in china is back at its peak. Go educate yourself more. Oil prices were not this bad in the last 4years, the present situation is about Russia and its alleged involvement in Ukraine. Forget economics theories, oil pricing is most affected by the politics of America Europe and Saudi Arabia. Oil is most priced now by November and december cos of winter and the snow it is associated with. But is that the case now? China is directing its industries in certain areas ofbthe country to either slowdown or shutdown completely due to air population. China is not in recession anymore . Production is back in full steam. Take your time to research rather then argue over issues you know very little about. |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by omenka(m): 7:06am On Nov 07, 2014 |
NwaNimo1:Are you sure you are talking about Nigerian politicians  |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by Nobody: 7:12am On Nov 07, 2014 |
pendy79:1. The US oil boom has had a minimal effect on global prices in previous months because, at the same time, there were all sorts of geopolitical conflicts elsewhere in the world. There was a civil war in Libya that affected oil output. Iraq was a mess. The United States and Europe slapped oil sanctions on Iran and pinched that country's exports. More than 3 million barrels per day of crude oil had been taken off the market by mid-2014 (global oil production is around 75 million barrels per day, so this is a significant fraction). But over the past month, those disruptions have started easing a bit. Libya's oil industry has started pumping out oil again, with exports unexpectedly rising 810,000 barrels per day in September. It's also becoming clear that the Islamic State in Iraq and Syria (ISIS) likely won't threaten Iraq's biggest oil fields in the southern part of the country. And, at the same time, oil demand in Asia and Europe has started to weaken, particularly in China and Germany. 2. The drilling period in Canada(both in-situ and oil sands) and North Dakota(shale) where you have the shale boom is the winter months. Shutdowns are summer and fall. Could you make the bolded part bit clearer? Right now, there is surplus oil in the market, laws of demand and supply. I am not complaining though as i am getting gas for cheap now at the pump. But it would have a serious impact on most economies relying solely on oil. E.g Nigeria and Iran. The only way the price can go up again is for OPEC or North/South America to cut back on production or some geopolitical civil war in oil producing countries so as to make the demand more than the supply. |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by pendy79: 7:44am On Nov 07, 2014 |
jejemanito: What I was taught of Siamese twins is that they are cojoined and attached double babies. So saying a child born 16years ago is a Siamese of another born 2 years ago is a wrong use of english and an uneducated and ill-informed choice of words. The last time I check the president of Nigeria is jonaTAN not IBB, Atiku, OBJ, Buhari. Obama met an American Economy on its knees, in deep recession with over 30% out of work, industries and automanufacturers laying off staff, housing crisis and mortgage issues with homeowners and their bankers. He didn't say george bush has damaged the economy so please bear with me there is nothing I can do. The American economy is back on its feet now and ours just like your madam harvard professor is facing challenges. If gullible and stupid are foul words there are more heinous ones I could use to describe you and others who reasons like you but I will leave those two for now. How much was our reserve when he came in? How much was our external loan portfolio when he came in? How much was crude selling then and how much was it during his 4and half years in office? How much power was the nation generating and how much are we now and despite the huge bills on the populace, are they seeing the light at all? how many economic saboteurs like mohammed abacha, ffk, ifeanyi uba did previous government pardoned and told to go with their loots? You're are all children of bad governance in the south east and since you are not brought up to condemn your thieving governors, it will be difficult to expect you to condemn the one there now since you've a nepotic and religious affinity with him despite his flairs. Sorry to disappoint you Nigeria is not solely peopled by your clans. 1 Like |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by Nobody: 7:47am On Nov 07, 2014 |
pendy79:   1 Like |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by pendy79: 7:57am On Nov 07, 2014 |
saxywale: If your analogy is to go by, oil prices rather go up during crises in any oil producing states. There is crisis in Libya and in Iraq so the price of oil should have increased rather than go down. Oil importation is expected to drop in europe not that it has dropped. How many countries is canada selling its shale gas to? Do you know how many depend on Russian gas during the cold winter for survival. I insist that the present oil price crash is more political than economics . Saudi is creating an oil glut to meet the shortfall from libya and iraq. |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by larrymoore(m): 8:30am On Nov 07, 2014 |
All our leaders are fools for subjecting Nigeria to all time oil dependent. |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by pendy79: 8:52am On Nov 07, 2014 |
With the price of crude oil heading south and the country’s foreign reserves under pressure, the Central Bank of Nigeria (CBN) yesterday banned the sale of dollars at its Retail Dutch Auction System (RDAS) to importers of telecoms equipment, power generators and finished products. Others affected by the ban include importers of electronics, finished products, invisible transactions business and information technology. However, they can source their foreign exchange requirements from the interbank market and dealers. Owing to the directive, the naira hit a new intra-day low in almost five years to N170.05 against the dollar yesterday, falling 1.87 per cent as the stock market continued to slide, Reuters reported. In a circular titled, Exclusion of Some Transactions from the RDAS Window, posted on its website yesterday, the CBN said: “This is to inform all authorised dealers and the general public that in order to maintain the existing stability in the foreign exchange market and to further strengthen the various measures already initiated by the Central Bank of Nigeria, the importation of the following items shall henceforth be funded from the interbank foreign exchange market only: electronics, finished products, information technology, generators, telecommunications equipment, invisible transactions.” In another circular, the central bank also said it had observed that banks and discount houses now have a preference for keeping their idle balances in its Standing Deposit Facility (SDF), thereby constraining the process of financial intermediation. In order to encourage banks to increase lending to the productive sector of the economy, the regulator therefore announced a review on the guidelines for the operations of the SDF. Specifically, it stated that “the remunerable daily placements by banks and discount houses at the SDF shall not exceed N7.5 billion. This shall be remunerated at the SDF rate of 10 per cent per annum. “Any deposit by a bank and discount house in excess of N7.5 billion shall not be remunerated. These provisions are without prejudice to the subsisting Monetary Policy Rate (MPR) corridor. “For the avoidance of doubt, the SDF remains as a monetary policy tool.” According to the banking sector regulator, the MPR corridor remains +/- 200 basis points, that is 10 per cent per annum up to the limit of N7.5 billion. Reacting to the CBN’s directive on the diversion of demand from CBN’s official foreign exchange window to the interbank market, a market analyst, who preferred not to be named, said: “The objective of this policy decision is to reduce pressure on foreign exchange reserves. “In October, the CBN used 10 per cent of its foreign exchange reserves to intervene in the foreign exchange market. The last time the CBN used such a large share of foreign exchange reserves, in a month, to intervene was in the second half of 2011 and the central bank devalued the NGN by 5 per cent in November 2011.” He said the policy decision confirmed that the CBN could not afford to keep intervening in the foreign exchange market to defend the official target exchange rate of NGN150 +/-3%, at the rate it has been doing in recent weeks, especially in a depressed oil price environment. “In enacting this policy, the CBN must have expected the interbank exchange rate to weaken. Which makes me wonder if this policy decision is a tacit devaluation” he said. On the second directive by the central bank, which capped banks’ deposits that earn interest, he termed the move negative for the naira. “I think this is negative for the naira, because it will result in banks diverting funds to treasury bills, which will put further downward pressure on yields and make them less attractive to foreign investors.” The market analyst said the fact that both policy decisions were naira-negative, was evident from the depreciation of the naira to its weakest level, NGN171.82/$1, where after it retraced to about NGN170/$1. “I believe the central bank must have anticipated further naira weakness, and widening in the gap between the official and interbank exchange. “It is for this reason, I believe this may possibly be a tacit devaluation, or at least a precursor to an explicit one that may be announced at the November 25 MPC meeting,” he explained. He added that the implication of the policies adopted by the CBN was that the rate of inflation would rise and could have adverse consequences on consumer stocks. The stock market also remained bearish in yesterday’s trading, as major company stocks depreciated further, with Nestle leading the losers' chart with a N47.5 loss, to close at N883. Forte Oil slumped from N208 to N194, while Dangote Cement, the biggest stock in the market, lost N10.4 to close the day at N198. WAPCO fell to its lowest price of N80 in four years, after shedding N8.73, Nigeria Breweries also took a hit to N143.45 having lost N7.55, while Unilever closed at N29.80, slipping down from N31.35. Market capitalisation sank to N11.425 trillion, losing N475 billion from N11.9 trillion at the close of trading the previous day. www.thisdaylive.com/articles/cbn-restricts-dollar-sales-as-naira-sinks-below-n170/193422 |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by pendy79: 8:54am On Nov 07, 2014 |
The naira is already sliding and losing value. It is austerity time again all thanks to the best president in Nigerian history. |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by Ozonna(m): 8:56am On Nov 07, 2014 |
pendy79: Now this is uncalled for. Why do you want to spoil your thread with this statement? |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by jejemanito: 9:00am On Nov 07, 2014 |
pendy79:Sorry to disappoint you I am not one of your so called nigerians who are blinded by sweet but yet empty speeches Siamese? Wrong use of words? I bet you didn't pay enough attention in school while being taught 'figures of speech' The last time you checked? And you also didn't check on how buhari IBB, OBJ performed during their miserable tenures? Pathetic! And please stop insulting the american government by using it as an analogy with your knobheaded government officials Not when sound minded politicians like Oshiomole and Fashola are in APC and yet the so-called progressives allow a useless brain-expired bigotry-addicted tyrant to be their flag-bearer Instead of you and your fellow e-rats to convince your gayneral lord to humbly step-down from politics and allow bright-minded men to be the torch-bearers you're busy wasting your youthful mind fighting for a muppet that doesn't give a damn about your future. A fuvtard that's is only concerned about stuffing up his greedy pockets before he kicks his bucket Reserve? Loan portfolio? An item sells for N100 in the 70's now sells for N5000 in 2014 and you expect a buyer to go get an N100 loan to buy that Item? How much is crude selling now? Ahaahahahaha I didn't know your buttlicking will get to the level where you blame your president for the fall in the price of a commodity whose value is simply driven by the forces of demand and supply. Smh! In fact calling you a fool would be an insult to foolish people so I will leave it for now  And there he is turning his empty hoax into a tribal punch without being so sure about where I come from. Am I even surprised? Afterall isn't that what your gayneral specialises in? Most especially when it has to do with peeps from accross the niger? mtcheeewAnd yes one more thing: get an english teacher to lecture you on the difference between 'subjective and objective statements' if common googling is like rocket science to you before spamming my mentions like I am some GEJ e-rat 4 Likes |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by john2014: 9:01am On Nov 07, 2014 |
@Pendy79 |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by pendy79: 9:20am On Nov 07, 2014 |
Ozonna: Am I in anyway wrong? 2 of the worst state governors in present day Nigeria are in the south East? Fact or lies? The biggest blind supporters of GEJ are minions from the same region? True or false? Even the south south don't sing his praise like the igbos. So what are we saying. |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by pendy79: 9:37am On Nov 07, 2014 |
jejemanito: slowpoke and individuals who lack sense of objectivity and sound judgments abound on the social media. You come up with flaws and stupid arguement about shale gas and illinformed knowledge of the oil industry. Siamese Twin are conjoined twin physically joined together. Figuratively can you compare a party formed 2 years ago to another formed over 16years? Has the APC formed the Central Government since inception that in your clear cut show of ignorance and stupidity you think the two of them deserve to be compared along same line of thoughts. Stupidly is not earned, it is a trait that is passed on from generation to generation and I won't need to bother where yours is passed from. If Fashola and Oshiomole didn't bother to declare their intention to run or refuse to buy presidential forms. Is it the function of the party to forcefully field them.as it's candidate? Moronic and sycophantic dunce like you who lack knowledge or understand how democracy runs assumes a party will just field a candidate even if the person shows no interest. You can come from the moon for all I care, you have a choice to vote who you wish either you stick the present clueless one or you go with the general wind of change flowing across the country . General Buhari will be the next president of Nigeria live with it or you go commit suicide. The most foolish people are those who feels they know but they don't realize they are just as gullible like a tot licking on its lollipop and assumes the world ends there. Ask a mad man, he assumes the man running away from.him is the mad one. That aptly describes your sorry state of mind. 1 Like |
| Re: Falling Oil Prices!!! Naira Faces Devaluation Soon. by engrsyer(m): 9:48am On Nov 07, 2014 |
Interesting. I must confess u guys are making sense. Pendy79 u r making sebse too. because i am beginning to wonder y d drastic fall of oil prices instead of flowing in a turbulent flow. Good work broses. I am enjoying the arguments, they r constructive. |
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