₦airaland Forum

1freshdude:
Bros is like someone is impersonating you o, cause I was only replying to this post.
Bevista:
The CBN should allow demand and supply to determine a fair price for the dollar. A price where supply can clear all demand; they do not need to deplete the Foreign Reserves to defend the naira. That is Economics 101.

What is the difference between floating and allowing forces of demand and supply determine price? and at what price does demand equal supply?

Be nice and educate us please

Dee60:
You want to put Naira in your account in Nigeria and withdraw dollars freely abroad! Where would Nigeria have all the dollars to fund that. with the oil price fallen to by more than 60?

Does it occur to anyone that allowining free withdrawal (dollar against naira) will result in huge dollar debt for Nigeria over time?

Is there not an avenue for students to have their fees transferred officially instead of via ATMs?

The protesters need to push their argument clearly. Otherwise, it is simple commonsense that you cannot dollarise your economy, unless you want to pile up debt for future generations. Common sense.

If we had saved forex when oil was USD100 plus, it would have helped a bit. But with dwindling reserve CBN has to look for ways to curb DOLLAR consumption. We just cannot continue to CONSUME what we dont produce and expect FG or CBN to do magic.

Please think before you talk. Read before you comment. Common sense says so..

1freshdude:
You are a Voodoo Economist! No too vex. No person in their right senses, who has a basic knowledge of economics would advise for the Naira to be allowed to float in this present state of our economy. If you argue for devaluing of the Naira against the dollar then your argument is tenable. What are you guys talking about sef? Everybody on Nairaland claiming egghead yet they cant even make a difference in their daily life decisions.

erico2k2:
Well true but the Naira yoy send home will soon mean nothing if this trend do not stop.

Bevista:
The Naira has never been allowed to float in the history of Nigeria. The CBN simply looks at its balance of payments and adjust the rate to maintain some level of equilibrium.
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The major currencies in the world like GBP, USD, EURO, YEN, etc are floating which means their rates are determined completely by market forces outside Central Bank controls. That is not what I am proposing for the Naira as we are not yet ripe for that.

Dee60:
You want to put Naira in your account in Nigeria and withdraw dollars freely abroad! Where would Nigeria have all the dollars to fund that. with the oil price fallen to by more than 60?

Does it occur to anyone that allowining free withdrawal (dollar against naira) will result in huge dollar debt for Nigeria over time?

Is there not an avenue for students to have their fees transferred officially instead of via ATMs?

The protesters need to push their argument clearly. Otherwise, it is simple commonsense that you cannot dollarise your economy, unless you want to pile up debt for future generations. Common sense.

If we had saved forex when oil was USD100 plus, it would have helped a bit. But with dwindling reserve CBN has to look for ways to curb DOLLAR consumption. We just cannot continue to CONSUME what we dont produce and expect FG or CBN to do magic.

Please think before you talk. Read before you comment. Common sense says so..

1freshdude:
You don dey speak in thongs I think? cause I cant see the relationship between the question I asked and what you answered!

Finally its not as easy as you guys think, the guys making policies at CBN are not dunce, cut them some slacks!

Bevista:
My bad. You win!

Bevista:
The Naira has never been allowed to float in the history of Nigeria. The CBN simply looks at its balance of payments and adjust the rate to maintain some level of equilibrium.
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The major currencies in the world like GBP, USD, EURO, YEN, etc are floating which means their rates are determined completely by market forces outside Central Bank controls. That is not what I am proposing for the Naira as we are not yet ripe for that.

Bevista:
So, In your opinion, the better option is to create scarcity and pretend that there is no demand?
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As painful as it may seem, if my business depends on FX transactions, I'd rather buy at that high rate than not get it at all. When importers exhaust their existing stock and cannot access dollars to import, there will be complete price dislocation in the system due to scarcity.
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The CBN can protect our Reserves (which I believe they should). But why not allow those that can buy dollars in the parallel market to make legitimate transfers and payments? That way, it's not Reserves that are used to settle those int'l payments.

morounkola:
The same people who taught us demand and supply also mentioned things like monetary policy and fiscal policy. My brother, it is tough but for this economy to move forward these actions need to be taken.

Emekamex:
Students abroad go hear am

Dee60:
Well, for too long we have relied solely on oil exports for forex. Now that ommodity has lost significant value in the market. We will suffocate our economy if we just leave everything to the dymanics of demand and supply when we know pretty well that we have a lot of local demand for USD and we have little (and less and less of) supply of USD. In fact the real problem is that we export crude oil at give away prices and import refined oil at exhorbitant prices. It is a silly thing to do. It takes 2 years maximum to build refineries big enough to meet local demands! Yet, we have not done so. I cannot explain why! But to allow a free fall is to throw a death penalty on our economy. Dont forget that if Naira is devalued 50% today, price of petrol in filling stations will go up by at least 25%. Will that not throw the country into crisis? With an army of twenty five million unemployed youths, how would they move around to fend for living with a free falling currency that will lead to a free falling price of petrol at the filling stations?

We cannot keep consuming what we dont produce and expect our economy to improve!

Let the CB find solutions - quick ones - for students who need to pay fees. But to allow Nigerians LIVING abrod to save Naira and spend dollars, that wont fly. No sane country does that!

omohayek:
I don't see any reason why the Naira shouldn't be allowed to freely float, given an appropriate fiscal framework. The main problem with the Nigerian economy is that the extreme swings in oil revenues have not been decoupled from government expenditure, leaving the economy exposed to much higher volatility than would be the case otherwise. If Nigerian governments set aside much more of their funds during the times when oil prices are high, the economy wouldn't have to suffer from dutch disease due to an overvalued currency as dollars rush in, and the saved-up funds could then be gradually run down whenever oil prices collapsed. This is precisely what Ngozi Okonjo-Iweala proposed with her Excess Crude Account, and it was working until the governors started badgering for it to be run down so that the FG could bail them out of their own financial recklessness, and the rest squandered on electioneering.

Going forward, Nigeria could enjoy a free float with little depreciation, as well as lower economic volatility overall, if the ECA were revived and used as originally intended, and budgets were drawn up with much more realistic benchmarks for the likely value of oil. The difficulty, as always in this country, is the short time horizons of politicians who only care about fixing their own immediate personal problems, no matter the long term costs to society as a whole.

PassingShot:
Unfortunately this is where GEJ and his cohorts brought us.

If you like, call it blaming or whatever, it is the dollarized foreign reserves that determine the pressure on naira. And it is the same reserve that Jonathan dipped his hands and that of his comrades' to loot like there was no tomorrow. Now that the "tomorrow" is upon us, we're excusing them instead of calling for their head.

Una never see anything!

Bevista:
I'll focus on the part of your comment talking about ECA and NOI.
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I do not agree with you trying to shift the blame from the FG to governors. President Obasanjo paid off $12bn to the Paris Club to enable them right off our $30bn debt. In spite of this huge payout, he still left over $60bn in the Foreign Reserves and over $10bn in ECA. Mind you, the average oil price during his tenure was $60.

The next administration witnessed unprecedented high oil prices. First $147 in the summer of 2008 and then over $100 between 2011 & 2014 and yet all we had was $30bn in FR and $2bn in ECA. The problem the governors had with the ECA was that the FG kept unilaterally withdrawing from the account without recourse to other stakeholders (the governors), so they had to revolt and demand payout.

omohayek:
I'm not trying to shift blame to anyone: I'm not a political partisan, and don't consider GEJ to be any better than Buhari. It's possible that I got the details about what happened to the funds wrong, but my larger point still stands: the Nigerian economy needs to be much more isolated from the volatility of the oil market, and what Okonjo-Iweala was trying to do was fundamentally sound, even if the implementation was botched through misgovernment. Avoiding the dutch-disease syndrome and its aftermath is the same reason why Norway set up a sovereign wealth fund so long ago.

olukenzo:
Nigerians should stop being cry babies. This is the economic situation we have found ourselves in. Government can not continue to sugar-coat these issues.

We need to look inwards ->

Buy made in Nigeria goods
Import less junk
Be creative and export more
Spend your holiday in Nigeria, go to Obudu, yankari etc
If there's such a huge market in Nigeria for any imported item, ask your foreign partner to come and setup a factory here.

My country must prosper!

Demdem2:
This is the pain will need to endure simply because during the days of plenty, Jonah-daft in his cursed state refused to save and build up our reserves. Instead, the fool was busy sharing money indiscriminately till there was nothing to share again. Even Obj that never had so much income like Jonah-daft saved, what is the drunkards excuse? This policy is also affecting me but for the collective good, it's the right decision. Thunder fire Jonah-daft and Ngozi the witch wherever they are now. Never again will we have fools like them govern us again.

COMPAQ:
You make sense. Unfortunately Nigerian business men are lazy. We like easy business... buy and sell instead of make any sell. To some extent though we are not encouraged to manufacture in this country.

Demdem2:
This is the pain will need to endure simply because during the days of plenty, Jonah-daft in his cursed state refused to save and build up our reserves. Instead, the fool was busy sharing money indiscriminately till there was nothing to share again. Even Obj that never had so much income like Jonah-daft saved, what is the drunkards excuse? This policy is also affecting me but for the collective good, it's the right decision. Thunder fire Jonah-daft and Ngozi the witch wherever they are now. Never again will we have fools like them govern us again.

carboblanko:
I can't resist not quoting you. Your comments have been one of the most rational on this thread.The truth is that have been living in denial for to long especially when the price of Crude was high.Now it has crashed and we are forced to face reality.I saw this day coming. It's just sad that the saw called Harvard trained former finance minister was busy telling us that we had the largest economy in Africa yet barely a year later we are in a crisis. People should realize that the party is over and adjust to the current realities.

pappilo:
Exactly. I am affected in that money I took to Nigeria 2 years ago and changed at N247, I brought back at N362. Infact my £2500 is stuck with a money transfer chap who has now refused to pick up his phone.

Having said this, the government is not obliged to help source dollars to fund for the ostentatious lifestyles of middle and upper class citizens.

The governments priority is to look out for the ordinary man who neither requires dollars nor imports anything.

olukenzo:
Government needs to do their part too. Electricity is paramount.

We should also stop this business of paying people salaries in dollars in Nigeria, expatriate or not, it's economic sabotage.

The airlines that were complaining the other day have no idea what they're talking about. Even my bank refused to take the $s I wanted to deposit in my £s account. So it is not just a Nigerian thing. Those guys are only interested in milking us and shipping $s out! That's what a lot of these foreign companies do.

It is no longer business as usual.

pappilo:
Exactly. I am affected in that money I took to Nigeria 2 years ago and changed at N247, I brought back at N362. Infact my £2500 is stuck with a money transfer chap who has now refused to pick up his phone.

Having said this, the government is not obliged to help source dollars to fund for the ostentatious lifestyles of middle and upper class citizens.

The governments priority is to look out for the ordinary man who neither requires dollars nor imports anything.

olukenzo:
Nigerians should stop being cry babies. This is the dire economic situation we have found ourselves in. Government cannot continue to sugar-coat these issues.

We need to look inwards ->

Buy made in Nigeria goods
Import less junk
Be creative and export more
Spend your holiday in Nigeria, go to Obudu, yankari etc
If there's such a huge market in Nigeria for any imported item, ask your foreign partner to come and setup a factory here.

My country must prosper!

omohayek:
The problem is that even that ordinary man needs to buy local products which require imported inputs in their creation or provision, and if he has a job in the formal sector, his employment will also very likely depend on such inputs. It does no good to the common man if he can't buy goods in the market because manufacturers can't make any more, or hold down a job because his employer lacks inputs required to keep him busy at work.

The CBN's policies have a far wider impact than on just the "middle and upper class citizens", who in any case are much more likely to have foreign currency assets to tide them over than the ordinary man (and much better connections for getting artificially cheap dollars).

erico2k2:
Who do you know that is employed in Nigeria that is paid in Dollars and not its equivalent? And if they pay you in dollars on Nigerian soil won't that be a good thing? Is that not what we are all praying for?

Bevista:
The times we are in are precarious. Any action by the Central Bank will have negative effects. What I am concerned about is the NET effect of a particular policy action.
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I believe the CBN should do everything possible to preserve the Foreign Reserves for use for essential items like fuel imports. But why not allow those who can access dollars elsewhere (at whatever price) to be able to make transfers and payments easily?