What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? - Business (3) - Nairaland
Nairaland Forum › Nairaland General › Business › What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? (42726 Views)
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by 100Cents: 7:51pm On Feb 19, 2016 |
Obiagelli:Charles Soludo has been proposing this policy many years now. |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by musicwriter(m): 7:51pm On Feb 19, 2016 |
Obiagelli:What you suggested is already happening illegally, the only problem is that the CBN don't have enough dollars such that it could flood the black market. Crooks in the CBN, commercial banks, cabals, top businessmen, e.t.c are already working hand-in-hand with CBN staffs, round-tripping and exchanging any available dollars and selling it back to the black market. They're actually enjoying the fall, and they wish it would continue for a very long time. Remember, the most profitable business in Nigeria right now is sourcing dollar from CBN and changing it to Naira. 3 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by 2rutalk1: 7:53pm On Feb 19, 2016 |
That will weaken the naira the more due to Purchasing Power Parity (PPP). The only thing that will save our naira at the moment is export promotion. As far as we remain an import dependent economy as well as a mono-economy, no amount of dollar pumped into the economy will ameliorate the situation. This is not a matter of the quantity of dollar in circulation. It is however caused by low level of productivity leading to low/no export of goods and services across borders. |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Cyberknight: 7:55pm On Feb 19, 2016 |
SirShymexx:Well said, mate. As unpalatable as it sounds, the stark fact remains that Naija is headed nowhere until the oil price heads somewhere. All this talk about reflating the economy with Keynesian expansionist polices is just that - talk. As long as the CBN's restrictive forex policy remains in place, the black market will continue to flourish and those who are benefiting from the currency subsidy (those roundtrippers) will too. |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by UrbanMystique: 7:56pm On Feb 19, 2016*. Modified: 8:24pm On Feb 19, 2016 |
Obiagelli:notice those shouting devaluation are wailers so when our economy finally looks like that of Zimbabwe as a result of inflation , they will come back with giant I told you so.. Those in need of dollars from bdc are mostly importers anyway, which we need to discourage in all ramification. 4 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by happney65: 7:56pm On Feb 19, 2016 |
Make them print Dollars jooo..But Obama go vex ohb  1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by EbolaParasite: 7:57pm On Feb 19, 2016 |
Obiagelli:How can you flood the economy with dollars if you don't HAVE DOLLARS? 1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by gists: 7:58pm On Feb 19, 2016 |
From my layman understanding, CBN does not have enough forex to do this. And I think that's what causing the scarcity. Besides, something tells me that move will backfire big time - except CBN have REALLY BIG reserve. |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by sharpman1(m): 7:58pm On Feb 19, 2016 |
Obiagelli:LOL. Na Jona we go ask. When they were sharing Dollars during the election, they were actually sharing what was meant to be our reserves. Hopefully we will get out of this sooner than later. ...but the truth is (in my opinion) if oil prices do not rise, we will be in this situation for a long time. Exports is not diversified in a short period, it takes deliberate efforts and the impact is felt in the long term. 5 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by poseidon12: 8:01pm On Feb 19, 2016 |
A someone already explained, we do not have enough dollars to flood the market with. Oil sells around 33 Dollars per barrel right now. It was said that it costs us about 30 Dollars per barrel to produce our crude oil. So we are making only about 3 Dollars per barrel. And we are struggling to find buyers because there is oil glut right now. And we have to have some reasonable amount saved in our foreign reserve so that we can pay for our imports. I hear we have enough to last about 6 months right now. So we do not have enough to flood the market. I am not an economist too, but that is the way I see it. 3 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by soulfood(m): 8:01pm On Feb 19, 2016 |
must everything become pdp versus apc? try answer the question asked you hear? cckris: 2 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by 989900: 8:03pm On Feb 19, 2016 |
Obiagelli: Dollar certificates in-lieu of cash (currency which was done in the said 2008 example) is to check racketeering. So, if states need to get anything with forex, they tender their dollar certs or vouchers (in appropriate value from their normal monthly allocation) to the CBN for processing. Meanwhile, thru all this, no Naira is substituted for dollar causing excess liquidity, which the CBN later has to mop up by borrowing money it does not need at high interest rates from the banks. It reduces states, MDAs, or any arm of government having billions or millions of Naira to be looking for dollars. It eliminates a lot of fraud, racketeering, profiteering, and sharp practices between the FG, States, CBN, and Banks -- so they don't like the idea!!! So we pay for it! And they want us to believe we solely and the fall in oil prices are the forex problem -- not the imported fuel, not their criminal policies. Importers cannot get the dollar certs, only goverment. However, the Naira, importers, and everyone wins, because the Naira will appreciate -- less pressure/demand from monthly chase of dollars by government establishments! 4 Likes 1 Share |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by lagdmark(m): 8:03pm On Feb 19, 2016 |
DropShot:We can buy from the Chinese |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by CAMNEWTON4PRES: 8:07pm On Feb 19, 2016 |
Very high inflation, too much money not enough good . |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by monlawal(m): 8:07pm On Feb 19, 2016 |
When I become the president, nairaland.com would be my official website to visit every morning and night. Nigerians in their witty and humorous nature churning out different points of view towards saving the economy. I wish baba Buhari is watching the brainstorming going on here 11 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by UrbanMystique: 8:08pm On Feb 19, 2016 |
sharpman1:this is someone that gets it. Kudos . 2 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by SirShymexx: 8:08pm On Feb 19, 2016 |
989900:I don't know who Boyo is. However, it's one thing to theorise something, practicality based on the current predicament is another thing. Dollarising the economy would even up killing the naira, which is basically what the CBN is trying to prevent. And the foreign reserves are already depleted. So where would the dollars come from? I believe the current economic situation of Nigeria, is very similar to what happened to Russia between 1997-1998, when it ended up devaluing the rubles, thus defaulting on its debts - with inflation reaching close to 90%. That's also why I also don't think Nigeria needs to devalue the naira right now, especially if this administration believes it can pull off any type of diversification - and make certain important sectors independent of oil, within a short period. Everything plaguing the Nigerian economy right now has a lot to do with wasteful spending and idiotic fiscal policies by successive governments, especially the last one. And there are no quick fixes. It's either you pray for oil prices to miraculously go up; take the long, hard, and painful way to rebuild an economy heavily dependent on one commodity; or give up by devaluing the naira and let the economy crash into abyss. Those are the only three options. 9 Likes 1 Share |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by banio: 8:08pm On Feb 19, 2016 |
Big trouble in little China. The only solution APC led FG is looking at is oil price bouncing back. Otherwise they have no solution yet for this continuous fall of the naira 2 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by asids55: 8:08pm On Feb 19, 2016 |
Obiagelli:madam,the major question is where will the cbn get the $ from?if nigeria where to be an export driven country that does not depend on just exporting oil,then I don't think we will be facing this problem,oil prices are falling meaning cbn can get enough in its reserves,and selling to BDC,will definitely dry up their foreing reserve chest..I hope this helps 2 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by 989900: 8:12pm On Feb 19, 2016 |
SirShymexx:Like I said earlier, you need to read extensively and probably watch the videos about it, to fully understand the concept. |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by CAMNEWTON4PRES: 8:15pm On Feb 19, 2016 |
+ why would anyone flood his country with foreign currency? How are you going to reprice products and services? Op that's a dumb move, even at the peak of the Asian crisis esp with Thailand which was experiencing worse problems than Nigeria with her bath .such measures never came up |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Nobody: 8:16pm On Feb 19, 2016 |
989900:Thanks for this explanation, one more question, now that it is said that we actually do have enough dollars anyways, we are stuck for the long haul |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by kellsblingsz(m): 8:16pm On Feb 19, 2016 |
Where do the black market get their dollars?? Am still puzzled becos the black marketers has a huge amount of dollars that even all the banks combined together doesn't have. 2 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by uvalued(m): 8:17pm On Feb 19, 2016 |
cckris:then there will be reverse-camping to pdp or apga instead of decamping to APC. bAD MKT. But on a serious note youths have started thinking before the setting up if the wole soyinka suggest economic team.. |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by Jonwesley(m): 8:25pm On Feb 19, 2016 |
Obiagelli:Obiagelli, don't be confused. This is not a buy and sell in a physical trade. Nigeria is not paid in cash for the crude oil sold. It's a paper or account balance. And nevertheless with the fall in oil prices, it's even worse as it's little. Your question on what happened to the excess dollars when a barrel was selling above $120, is a good one. But it was not managed properly by the government. With insufficient inflow from oil sales, there is therefore no way U can flood states with dollars. You can't give what U don't have. 1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by AZeD1(m): 8:26pm On Feb 19, 2016 |
989900:I've read some of Boyo's theories but I'm not really sold because Nigerians are a peculiar people, we have a way of making theories that worked else were failed. Like SirShymexx has said, we have to rough it out. I believe this is a good thing. If we don't get it right now, we will never get it right. 1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by ibnjarir93(m): 8:30pm On Feb 19, 2016 |
LRNZH:Fine analysis. But don't you think a floating currency would be better when all this diversification is done? |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by teeghurl(f): 8:30pm On Feb 19, 2016 |
Obiagelli:Those goods Nigeria import on daily basis, do they pay in naira? Remember importation is more than exportation |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by grandstar(m): 8:32pm On Feb 19, 2016 |
Obiagelli:What you have written unknownly is an economic masterpiece. what you said has the support of Charles Soludo and a fervent campaigner of it, Henry Boyo. Please read the latters write up about it at the back of Punch at least 1 in 2 weeks. Soludo tried such in 2007 but with a tweak. The 3 tiers of government would be paid in dollar certificates. However the governors did not like it and complained to Yar'Adua who had it quashed by even promulgating a law against it. Paying in dollars would answer 2 of the most pressing pronlems in Nigeria today: the high cost of credit and its scarcity. Every month, the government substitutes the dollars into naira and pays the 3 tiers of government. This increases the money supply greatly forcing government to increase lending rates. That is why we borrow at 25%. If they however paid in dollars, there would be no excess liquidity. This will lead to a crash in lending rates to between 5-8%. Also because dollars will ne chasing naira, the naira will appreciated greatly in value. 6 Likes 2 Shares |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by plaetton: 8:32pm On Feb 19, 2016 |
Obiagelli:Naira is our national currency. CBN prints naira commensurate with the economic activities. If the CBN prints more naira than the productive capacity of the economy, then then inflation will strangulate the economy. 1 Like |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by legendsilver(m): 8:33pm On Feb 19, 2016 |
cckris:is this what you have to show for all the money your parents wasted for you in the University? How I wish the money was used to sponsor a goat to the University, it would have paid off rewardly than wasting it on you. Shior!!!!!! Pours spit to the ground 5 Likes |
| Re: What Exactly Will Go Wrong If The CBN Floods The Economy With Dollars? by ibnjarir93(m): 8:33pm On Feb 19, 2016 |
Jonwesley:Plus borders were shut during elections so virtually no USD demand for imports. |
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