₦airaland Forum

lovetrust:
us dollar to a naira is exchanging for 220 naira in Abuja parallel market/black market.

odiks:
• BDCs to introduce forex band, reforms for parallel market

Foreign currency speculators, who launched an unprecedented attack against the naira in the last two weeks, got their fingers burnt on Tuesday when the nation’s currency staged a major recovery, rising to N310 to a dollar at the close of business, compared to N375 at which it sold on Monday.

Jehovah bless Baba Buhari

The naira fell to an all-time low of about N400 to a dollar on the parallel market last week fuelling concerns that it would plummet further to N450-N500/$ this week.

But findings from THISDAY showed that the naira defied expectations, climbing to as high as N305 to the dollar at some parallel market points in Lagos on Tuesday afternoon, before settling at N310.

Forex dealers and currency analysts attributed the significant gain on the parallel market to excess supply of the greenback in the market, even as it looked like a lot of speculators lost the shirts on their back.

THISDAY gathered from a reliable source that speculators who thought that by attacking the currency last week, coupled with misplaced concerns that the Central Bank of Nigeria (CBN) was going to stop the allocation of forex for school fees and medical bills abroad, this would compel the central bank and President Muhammadu Buhari to alter their stance against the devaluation of the currency.

But they were disappointed when Buhari, in Egypt at the weekend, adamantly ruled out the devaluation of the naira on the grounds that Nigeria does not have the competitive advantage to benefit from an official currency adjustment.

Reacting to the president’s stance, speculators who had been betting that the naira would depreciate further, started dumping the dollars with reckless abandon, effectively creating excess supply of the greenback in the parallel market.

Commenting on the situation in the secondary forex market, the chairman, Association of Bureau de Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, said: “The market is moving from perception to reality.”

Similarly, an analyst at Ecobank Nigeria, Mr. Kunle Ezun, predicted that the naira would edge higher in the coming days.

“We expect that the naira would appreciate further. We have always said that what happened last week was purely a speculative attack.

Some people felt that if they pushed the naira down to that level, they could force the CBN to devalue, so that when the naira is devalued and the gap widens further, they would now bring out the dollar cash to make a kill,” Ezun said.

He however urged the fiscal authorities to introduce policies that would help stimulate economic activities, saying that the fundamentals of the economy were still weak.

ABCON also aligned with the federal government’s decision not to further devalue the naira.
Gwadabe said this at a media briefing, pointing out that devaluing the naira would create more problems than it would solve.

He said that as a way of enhancing transparency in the BDC sub-sector, his association had decided to introduce a forex rate band weekly.

This rate band is expected to serve as a guide for all BDCs and the public on the prevailing exchange rate across the country, he added.
In addition, it will be operated in line with the regulated forex rate in the economy.

“This is to forestall exploitation of forex end users, and also to ensure that end users are informed to avoid falling victims of exploitation.

“The band will be announced via weekly press releases that will be circulated to the media for publication.

“ABCON will introduce a series of measures aimed at transforming the operations of BDCs in Nigeria to align with global best practices. These include: review and updating of BDC operational manual; introduction of live trading platforms; automation of all transactions and documentation requirements; and increased partnership with the CBN and other relevant agencies.

“Further, as part of its responsibility as a self regulatoryorganisation (SRO), and also in continuation of its aim to transform its members to compete within the global regulatory currency market, ABCON will seek the approval of relevant monetary and fiscal authorities as well as partnership for effective use of the nation's external reserves to enhance domestic trade and foreign exchange management.

“To this end, our website and internet platforms will be developed to position BDCs to serve as agents of Western Union and currency auctioneers.

“We would also develop platforms that will allow our members to access sources of autonomous foreign exchange like govt agencies, embassies, IOCs and export proceeds, etc,” he explained.
He also urged the federal government to introduce policies that would diversify the economy to increase non-oil export earnings, and reduce imports.

This, according to him, would lead to increased foreign exchange inflow and a reduction in demand for foreign exchange.

In addition to policies that would diversify the economy, ABCON suggested that the CBN should review the policy of dollar importation into the economy for the purpose of defending the naira.

According to the association, the central bank should introduce a policy whereby the naira is used to intervene in the real sectors of the economy to boost productivity.

Furthermore, Gwadabe said as a way of reducing demand for dollars, the CBN should explore the option of promoting the use and acceptability of naira for transactions within the West African sub-region.

He added: “We observe that this is already happening at the level of informal trading activities within the sub-region, and it is our belief that this can be replicated at the level of formal economic activities.”

http://www.thisdaylive.com/articles/speculators-get-their-fingers-burnt-naira-strengthens-to-n310-/232783/

RichYoungNigga:
Analysis from uneducated people.
So, because naira gained 60 naira, you have the courage to dance around ??

The oil sale is only source of Nigeria income, what happens when the top dogs like Saudi Arabia and Iran floods the market with excessive oil ?? and they also sells way cheaper.

This your jubilation will turn to sorrow soon.
Let's watch and see.
Next month, $1 will exchange for 500 naira.

olu77:
Remote and deserted place?!! . Thank God you are not God

vivavik:
I don't understand u, are u a Nigerian? Why prophecy doom? Are u happy with the economic situation? Why not pray for us rather than wish ill luck? I have in buhari, #istandwithbuhari#

plaetton:
Lol.
I think you're the one being emotional here.

You say the " current policy".
What current policy are you referring to ?
Part of the Naira's problem is the absence of a clear policy.

Burying one's head in the currency sand is not a policy. At best, it is an ad-hoc policy, with no long term goals.

In case you're missing the point, devaluation is not intended to solve anything problem. It just the market trying to find it's equilibrium point, it's equilibrium value.

You create bigger problems and distortions when you try to play economic acrobatics not based on realities.

How long can you artificially "save" the Naira ?
Till which shoe drops?

Concrete and long term reajustments in consumption and productivity is what is needed to give REAL value to our currency, not presidential fiats.

SirShymexx:
Lool.

Same way you found "equilibrium" with SAP that ended up becoming the genesis of Nigeria's economic problems, no? Hysterical.

Even the pounds sterling is fixed for a reason.

Dude, go back to elementary school and study the basics of economics.

plaetton:
Oh please, don't insult yourself .

SAP?
By going to borrow foreign currency to fund a bloated and spurious budget, Buhari is already threading the well known path of SAP.
SAP by any other name is still SAP.

You have a tendency to babble about unconnected and irrelevant issues.

The pound is fixed for a reason?
When, and by whom ?

Elementary school economics , you say?
Hhhmm. No wonder.

If you learnt your economics in elementary school, well then, I am wasting my time here.

I learnt economics at a much higher level.

SirShymexx:
Stfu!

Is the pounds sterling allowed to float freely like US dollar and Canadian dollar? And how often does the Bank of England intervene from time to time in the exchange rate? The Japanese yen is another one.

I alluded to SAP cos the same proponents of SAP are the ones campaigning for devaluation. And I reiterate: what problem is devaluation going to fix and how are you going to fix the inflation that will happen after devaluation? Apart from spouting nonsense like a bleating goat about the dollarisation of remittances, you still haven't proffered any solutions on how to fix the problems of the inflation and the economic crisis that will follow devaluation.

BTW, I never said anything about the pathetic budget. This is about devaluation vs. saving the naira. Stick to that and stop jumping around like a blinkered duffer.

plaetton:
You goofed big time and betrayed your economic illiteracy by stating that the pound is fixed.
Big laugh.
And to support this moronic statement, you point out that the bank of England invervenes in the currency Market. Bigger laugh.

SirShymexx:
The problem with you is that you say a lot without actually saying anything and like the rest of the armchair economists naij, you lot just talk for the sake of it. This is my last reply to you.

I was actually going to post a PDF report from BoE, which I posted on a Yoruba forum a few weeks ago, about how the BoE intervenes from time to time, to fix the pounds sterling. But, I don't really have time to start digging posts on that forum. However, I'll post other references: 1). Japan. 2). BoE.

1). You can read this link: Q&A: Currency interventions http://www.bbc.co.uk/news/business-12787285

2). https://books.google.co.uk/books?id=wO5DRklB_tAC&pg=PA31&lpg=PA31&dq=does+the+bank+of+England+intervenes+in+the+currency+Market&source=bl&ots=y2D0nEDfPx&sig=vMJPWk_0lZnhsMNV-4LFbuydfos&hl=en&sa=X&ved=0ahUKEwiswbDcpJHLAhWHbxQKHUDlCl0Q6AEIWTAJ#v=onepage&q=does%20the%20bank%20of%20England%20intervenes%20in%20the%20currency%20Market&f=false

plaetton:
My friend, it seems you're a slow learner.
Pls Read my last post again.

Every major central bank, NOTJUST the BOE, intervenes in currency markets from time to time, using various instruments, to nudge their currencies up or down temporarily.
Sometimes it works, sometimes it doesn't.

That is not the same thing with FIXING or pegging a currency, which the BOE never ever does.

No knowledgeable person would conflate the two.

You goofed. You know it.
Humble yourself and stop ponticating.

SirShymexx:
You honestly don't know what you're talking about.

Can the US federal reserve with little or no means and its enormous deficit to reserve ratio intervene in currency market? Does the Canadian central bank intervene in the currency market?

So, why say every central bank intervenes?

vivavik:
I don't understand u, are u a Nigerian? Why prophecy doom? Are u happy with the economic situation? Why not pray for us rather than wish ill luck? I have in buhari, #istandwithbuhari#

Seamareggae:
Some Nigerians thoo... Nd tomorrow... That guy would run to church.. Praying for a better tomorrow...

God will see Nigeria thru....

plaetton:
Again, you don't get it.

The Canadian central bank and the US federal reserve Do intervene from time to time.
Again, listen carefully, by using various instruments at their disposal.
Repeating myself, such measures may include simple acts like holding a press conference to give policy guidance or simply talking up or talking down your currency.

It might also , often does, include raising or lowering interest rates.
It may also include sale or repurchase of Treasury bills or other bonds.
Many times, it could include the outright purchase OR sale of their respective currencies to nudge it up or down to achieve whatever policy goal for that week, month or quarter.
OK?

These are what are called interventions, not FIXES.

Now, to educate you further (you can thank me later) the US Treasury department and the US federal reserve are two different and distinct institutions with distinct functions.

The federal reserve has an unlimited reservoir of cash. They can actually print or mop when it suites them.

Their balance sheet has Zero to do with US Treasury's budget deficit.
So please don't ever conflate the two in the same way you conflate periodic interventions with FIXING.

Arizonaguy:
No mind am...he is a true definition of a pessimist

SirShymexx:
Loool.

Going off on a tangent again...while saying a lot without saying anything.

What's the correlation between what you posited and interfering with the price of a currency in the foreign exchange market?

vivavik:
as in eh! I could hardly believe he said it. Mehnnnnnn I pray God disappoints them.

plaetton:
I am not sure I understand your question.
But let me remind you that the words " Market " and "Fix" don't belong in the same sentence. They are opposites.

For good example, if the British pound was FIXED, as you mistakenly say, then the same British pound cannot be traded 24 hrs everyday against other international currencies in the forex MARKET.

So, let me repeat again for the hundredth time, intervening in the forex market from to time to shore up or nudge lower one's currency is not the same as FIXING the currency.

FIXING or pegging is done by Fiat, not through the markets.

Seamareggae:
God is already disappointing them....

Nigeria shall be great again....

SirShymexx:
The problem with a lot of you who dwell on theories and make argument based on Bretton Woods system is that your arguments are always linear. It's always about garbage in and garbage out, due to unnecessary cramming of junk. The fact that certain currencies aren't tagged to the dollar or Fiat and are termed as "free floating", that doesn't mean they float freely. The pounds sterling, Japanese yen, and Chinese yuan are classic examples. The pounds sterling for example is highly overvalued. So how does it keep its value that high without being managed cos if it were allowed to flow freely, it won't have the same value that it has. That was basically what I was alluding to by saying it's fixed - not fixed in context of the Bretton Woods system.

The Japanese yen is another currency that doesn't float freely in the market and its value is controlled. Ditto the Chinese yuan. And none of these currencies are pegged.

That's why I keep telling you to talk less and listen more.

jcross19:
we need a better nigeria not by shouting sai baba, this time now baba is saudi arabia , hitting his head on the floor. So I pray more strength to our naira please. I love buhari stand on that devaluation that's good.

Hitting his head the same way Jesus did!

Demmzy15:
Hitting his head the same way Jesus did!

jcross19:
can you tell me how judaism people do pray? Are they hitting head on the floor ?

Did Jesus hit his head on the floor yes or no?

Demmzy15:
Did Jesus hit his head on the floor yes or no?