₦airaland Forum

tuale4u:
devaluation will only make import easy for importers. d current system will promote local production in d long run. All d people asking for official devaluation is to make import of luxury and import of products we want to make locally cheaper. This will kill local production. We are currently importing luxury and other non essential product at 320 naira to a dollar. If we devalue to say 250 and free forex, we start importing them at 250 naira to a dollar. This will kill d motivation 4 local production.

we must bear dis initial difficulties to achieve local production.

i support PMB rigidity on this. Any attempt tp go flexible we will return to where we have been and Nigeria wont progress.

Did you study that new course in school call zombiesm. Cos it looks like you got an A in it

Marvin67:
The economist doesnt need to write all these grammer, even the old woman selling pepper down the road can explain that things aren't working and times are hard. Companies are releasing employees, cost of the day to day good has increased, there's no fuel to run around, everything is tight , simply because one baba would not listen.
If only this president would listen, if only he'd seek advice from those who know.
Anyway, we re waiting for him around the corner in 2019. His party says "no vacancy in aso rock" we'd show them that with our votes we decide who stays in aso rock and who leaves aso rock.

Let's even start now, click like if you want Buhari out of aso rock , for a better Nigeria. Click share if you believe Buhari should remain in aso rock to fix Nigeria

Stop begging for Like

tuale4u:
devaluation will only make import easy for importers. d current system will promote local production in d long run. All d people asking for official devaluation is to make import of luxury and import of products we want to make locally cheaper. This will kill local production. We are currently importing luxury and other non essential product at 320 naira to a dollar. If we devalue to say 250 and free forex, we start importing them at 250 naira to a dollar. This will kill d motivation 4 local production.

we must bear dis initial difficulties to achieve local production.

i support PMB rigidity on this. Any attempt tp go flexible we will return to where we have been and Nigeria wont progress.

Prices of essential commodities and goods are already at par with forex black market prices.. Dolling out $200m at N199/$1 is another way of enriching his friends and cronies.. They will simply round-trip and sell to mallams at @N300/$1 and make over 50% without any sweat

Tiskified:
DISCLAIMER: This post is a my reflection on a currency devaluation. It is not meant to be a defense of or a rejection of a decision to devalue. Note also that this post is not political in nature. Just my thoughts.

Where a country operates a fixed exchange rate syatem like we do in Nigeria, devaluation as a monetary policy would involve reducing the value of the Naira with respect to those goods, services or other monetary units with which the naira can be exchanged. When we devalue our currency, we officially lower its value versus other currencies in a fixed exchange rate system that is the monetary authority (the CBN) formally sets a new fixed rate with respect to a foreign reference currency (in this case the dollar)

A devaluation means that the value of the Naira falls. Nigerians will find imports and foreign travel more expensive. However domestic exports will benefit from their exports becoming cheaper.

Herein lies the crux of the matter.

A weakened currency is only valuable if we EXPORT!

Advantages of devaluation

1. Exports become cheaper and more competitive to foreign buyers. This provides a boost for domestic demand and could lead to job creation in the export sector.
2. Higher level of exports should in theory lead to an improvement in the current account deficit. This is important if the country has a large current account deficit due to a lack of competitiveness.

3. Higher exports and aggregate demand (AD) can lead to higher rates of economic growth.

Disadvantages of devaluation

1. Is likely to cause inflation because:

Imports more expensive (any imported good or raw material will increase in price)

Aggregate Demand increases causing demand pull inflation.

Firms / exporters have less incentive to cut costs because they can rely on the devaluation to improve competitiveness. The concern is in the long-term devaluation may lead to lower productivity because of the decline in incentives.

2. Reduces the purchasing power of citizens abroad. e.g. more expensive to go on holiday abroad.

3. A large and rapid devaluation may scare off international investors. It makes investors less willing to hold government debt because it is effectively reducing the value of their holdings.

4. If consumers have debts, e.g. mortgages in foreign currency – after a devaluation they will see a sharp rise in the cost of their debt repayments. This occurred in Hungary when many had taken out a mortgage in foreign currency.

In summary devaluation of a currency is not a task to be taken lightly. If we stimulate exports properly then it MAY be beneficial in the long run. But just devaluing for the sake of having the dollar more readily available is a reckless economic endeavour.

l

How many foreign people or businesses can agree to transact business with Nigeria at the Buhari pegged value of Naira vs foreign currencies; while the parallel market has Naira exchanging at nearly double the officially pegged rate.

tuale4u:
devaluation will only make import easy for importers. d current system will promote local production in d long run. All d people asking for official devaluation is to make import of luxury and import of products we want to make locally cheaper. This will kill local production. We are currently importing luxury and other non essential product at 320 naira to a dollar. If we devalue to say 250 and free forex, we start importing them at 250 naira to a dollar. This will kill d motivation 4 local production.

we must bear dis initial difficulties to achieve local production.

i support PMB rigidity on this. Any attempt tp go flexible we will return to where we have been and Nigeria wont progress.

Even though what you said is right about devaluing the currency affecting local production. You cant be blind to the fact that even the local producer still import raw material and some cases other supplies to the country. The cost of locally made goods are automatically sky rocketing as a result of this.

You also seem to ignore the fact that Nigeria cannot be a producing country with the unstable electricity, poor transport system and lot of other basic infrastructure that are lacking.

At this stage blocking importation is highly unreasonable.

Dahveydson:
Listen to the economists at your own peril.

PMB refuses to devalue, if you like write a whole bible on it. A policy that is still in motion have been concluded not working already.

Sigh

Because MAJORITY of Nigerian Business concerns are into ILLEGAL BUSINESS/IMPORT........... most of them cant go to CBN to source for FOREX but are very quick to tell us that the policies are not working!

For a Nation that hardly manufactures anything, how in heaven is devaluation suppose to help us?
Which "locally manufactured goods" are going to become cheaper..... that we will be selling to other countries (due to its cheap value as a result of devaluing the currency), to earn more forex? Please tell me the products, please!


PMB is right, devaluation will not help us one bit but it will complicate our problems as inflation will become so bad that Nigerians wont be able to afford the price of goods (mostly imported), that they consume on a daily basis.

Even without devaluation, Nigerian-penchant of hiking the price of goods is already at play and we can see as they increase prices at will!
But this is a "democracy" (demonstration-of-crase may be more apt), the Govt cannot impose "price controls" otherwise, that would/should have been the next thing right now.

Ordinary Nigerians selling goods are the enemy of every other Nigerian!
Everybody wants to profit excessively.

Well, lets lie on our bed as we lay it........ but please stop blaming PMB/CBN policies.
Come 2019, with the little but gradually steady improvements l am seeing, PMB will still have my vote.

#Wailers can go take swim.

adconline:
Prices of essential commodities and goods are already at par with forex black market prices.. Dolling out $200m at N199/$1 is another way of enriching his friends and cronies.. They will simply round-trip and sell to mallams at @N300/$1 and make over 50% without any sweat

You got it.

A country's leadership must work to have its banking institutions and market forces determine the value of the country's currency, not by looking the other way as currency sellers deeply influence the exchange rate of Nigeria's Naira.

Any artificial way to fix the exchange rate of a country's currency,, like Buhari is pegging Naira exchange rate, is voodoo economics.

OrlandoOwoh:
Our local industries must not die. Sai Buhari.

unfortunately local industry that wants to survive must adapt or die, they must find local substitutes for their foreign inputs,

Unfortunately corruption will thrive in this situation and some certain people with easy access to forex at the official rates will definitely grow richer, this decision by the government not to devalue our currency works in their favor.

OrlandoOwoh:
Our local industries must not die. Sai Buhari.

Our local industries produce fake and quack products still most of their prices is far higher than foreign products imported. Take for instance Innocson cars, Nigeria cements, cable wires, and other made in Nigeria products.

Anytime I remember Tower of Babel in the Bible. I remember Nigeria. How can a country with so many different ethnic and religious group grow. There is no unity among Nigerians. Your next door neighbor will want to cheat or exploit you by all means forgetting patriotism. Let's lie on our bed the way we made it

ellechrystal:
And some zombies who know nothing about Economics will come here n type trash, God help us o. This kind president , his policies r killing his citizens,
N he is so non challant about it.
I blame the people who were chanting "CHAINS"
It's not about being victorious after the elections, the real thing is how to maintain the victory
JONATHAN, I no go lie, we miss u
I guess even in defeat, Jonathan is the victor here

Definitely.


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ellechrystal:
And some zombies who know nothing about Economics will come here n type trash, God help us o. This kind president , his policies r killing his citizens,
N he is so non challant about it.
I blame the people who were chanting "CHAINS"
It's not about being victorious after the elections, the real thing is how to maintain the victory
JONATHAN, I no go lie, we miss u
I guess even in defeat, Jonathan is the victor here

Some would even argue and do anything when they know he isn't doing anything at all..

Stelvin101:
Our local industries produce fake and quack products still most of their prices is far higher than foreign products imported. Take for instance Innocson cars, Nigeria cements, cable wires, and other made in Nigeria products.

1.Many of our local industries do produce good products.

2.Nigerian cement and cable are better than foreign counterparts.

3.Innoson's cars are expensive because he imports almost all the parts needed to make an Innoson car.

4.All in all....we need to develop our raw materials.

jamesbanjo:


We all know BABA is confused(frustrated)..

We just have to endure til after his tenure..

Yes. He is confused now as he was in 1984.
He has learnt NOTHING since then and CANNOT be called a wise old man.
NOTHING.


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Quakertellicus1:
1.Many of our local industries do produce good products.

2.Nigerian cement and cable are better than foreign counterparts.

3.Innoson's cars are expensive because he imports almost all the parts needed to make an Innoson car.

4.All in all....we need to develop our raw materials.

The solution to Nigeria current economic situation lies in the hands of Federal Govt. Especially CBN.

In my opinion, I am tempted to say....let's face reality and devalue.After all, what the CBN is doing is waiting for oil prices to jump up again.

But here is the problem....the only thing we can export is oil, and oil's price we do not control. Devaluation won't help us that much there.

Another issue is that inflation would ,in my opinion, jump up. Because with devaluation, you have more naira chasing imported goods.

And it certainly does not improve the forex supply for the country's savings account. That for now can only come from raising the amount we export....or hoping oil prices keep on shooting up. (The latter is not going to happen).

I can see the Economist is for devaluation. It would have been good advice....if we were producing goods we could export in large quantities...and whose prices we could control.

Baba walker is really scared of his rubbish policies now o.... U don't just enter a democrtic settings n start decreeing shiits... Just like his administration didn't have data for unemployed youthhe has no knowledge of nigerian economy...

DankemzI:
And this same Party said there's no vacancy in 2019.
I would like to know the kind of propaganda they'll use then
Old Tinubu fooling himself, instead of bringing a prof. "Osibanjo" to rule.
He brought a brain-dead illiterate smh

The same same change chain propaganda that their zombies bought on March 28, 2015 na.
You better get ready.


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Imagine six posts below starting with "How How How". But How come you didnt notice it

For those who ask and are expecting the result as if it is the change, you must pause and find out what the meaning of change is, they think and expect that the change is an end itself, almost as a noun, change is a verb, and it is the process in which you reach your goal and aspiration.
The goal is the goal but change is what helps you reach your goal, it is a continuum. A person that is 200kg and is fat and wants to reduce to 80kg, change is not reducing to 80kg, the goal is reducing to 80kg but change is to stop eating junk food, stop ice cream, go to the gym and exercise, that is the change that will help you shed the weight and you reach your goal of 80kg.


I stands with PMB

Thank you abeg. Some mumus are already praising the writer. Dollar is because we import, according to the writer "everything else". Na by force to input? We must start looking inward.

Does the Economist think people will cut down importation of raw material if importation continues to be sweet?

Dahveydson:
Listen to the economists at your own peril.

PMB refuses to devalue, if you like write a whole bible on it. A policy that is still in motion have been concluded not working already.

Sigh

Mr. Buhari has never been serious from time immemorial. A back to back failure


Ngeneku will be dodging this.

alexlee50:
where you people not applauding when someone wrote a stupid article in the economist calling GEJ an ineffectual buffon now the economist has talen a swipe at your hero, I want us to ignor the paper? U guys have a funny sense of judgement

Go wail to a wall if you cannot show me where I applauded them for calling GEJ an ineffectual buffon

Buhari is a novice in 21st century leadership/governance.

According to a super zombie , only PDP people are muttering, apc zombies are suffering but still smiling

tuale4u:
devaluation will only make import easy for importers. d current system will promote local production in d long run. All d people asking for official devaluation is to make import of luxury and import of products we want to make locally cheaper. This will kill local production. We are currently importing luxury and other non essential product at 320 naira to a dollar. If we devalue to say 250 and free forex, we start importing them at 250 naira to a dollar. This will kill d motivation 4 local production.

we must bear dis initial difficulties to achieve local production.

i support PMB rigidity on this. Any attempt tp go flexible we will return to where we have been and Nigeria wont progress.

you are not right. we can discourage importation of what we can produce here by increasing the import tax. refusal to devalue officially will do us more harm than good.

tuale4u:
devaluation will only make import easy for importers. d current system will promote local production in d long run. All d people asking for official devaluation is to make import of luxury and import of products we want to make locally cheaper. This will kill local production. We are currently importing luxury and other non essential product at 320 naira to a dollar. If we devalue to say 250 and free forex, we start importing them at 250 naira to a dollar. This will kill d motivation 4 local production.

we must bear dis initial difficulties to achieve local production.

i support PMB rigidity on this. Any attempt tp go flexible we will return to where we have been and Nigeria wont progress.

The stimulus local production needs is regular power. In a country with erratic power, refusing to devaluate currency won't solve any problem but rather cause the factory to Shut down. They are already paying too much to produce by generating their own power. Countries like Japan devalued their own currency and are yet still highLy industrialised. Let our government give us constant power and see what happen afterwards. How I wish you know how many artisans and would-have-been small scale entrepreneurs have become okada riders for lack of power to do their businesses.

The Economist is the most stewpid publication out there. Anyone who takes them seriously these days is not serious himself. I dislike Buhari with all my might because of his density. But I detest The Economist with everything I have. In fact The Economist is contemptible. Were they not they ones who teamed up with lying APC demagogues during the last elections to endorse Buhari as the best thing for the country since independence from the duplicitous British? Were they not the one recently still exposing their idiocy by calling GEJ the Ineffectual Buffoon? Now, who is the real Empty Buffoon? What has changed in Buhari
between last year and now to warrant this contemptible wailing from a truly ignorant publication? Anyone who takes that publication seriously is even a more daft olodo than Buhari.

Marvin67:
The economist doesnt need to write all these grammer, even the old woman selling pepper down the road can explain that things aren't working and times are hard. Companies are releasing employees, cost of the day to day good has increased, there's no fuel to run around, everything is tight , simply because one baba would not listen.
If only this president would listen, if only he'd seek advice from those who know.
Anyway, we re waiting for him around the corner in 2019. His party says "no vacancy in aso rock" we'd show them that with our votes we decide who stays in aso rock and who leaves aso rock.

Let's even start now, click like if you want Buhari out of aso rock , for a better Nigeria. Click share if you believe Buhari should remain in aso rock to fix Nigeria

Many Nigerians don't have mind of their own. So they don't know what they want.

millionaireman:
l

How many foreign people or businesses can agree to transact business with Nigeria at the Buhari pegged value of Naira vs foreign currencies; while the parallel market has Naira exchanging at nearly double the officially pegged rate.

Your question is a good question.

Let me start by de-politicising it (lol).

I do not wish to be involved in the policy battefield that Nigeria has become.

A pegged exchange system that we claim we operate is supposed to have the advantages both of a fixed exchange rate system and a floating (or market determined) exchange rate system while eliminating most of their disadvantages.

A pegged exchange rate system is a hybrid of fixed and floating exchange rate regimes. Nigeria "pegs" the naira to the U.S. dollar because our external debt is denominated in USD and most of our current trade partners trade in that currency.

Typically, with a pegged exchange rate, an initial target exchange rate is set and the actual exchange rate will be allowed to fluctuate in a range around that initial target rate. Also, given changes in economic fundamentals, the target exchange rate may be modified.

Pegged exchange rates are typically used by smaller countries. To defend a particular rate, they may need to resort to central bank intervention, the imposition of tariffs or quotas, or the placement of restrictions on capital flow (we have adopted all of these approaches in the last one year alone!)

If the pegged exchange rate is too far from the actual market rate, as is the case now, it will be costly to defend and it will probably not last. The people who benefit the most are still currency speculators. The problem is that the currency speculators now aren't the small scale speculators but large speculators, who may have the clout to bribe CBN officials to get the dollar at the official rate.

Advantages of pegged exchange rates include a reduction in the volatility of the exchange rate (at least in the short-run) and the imposition of some discipline on government policies. One disadvantage is that it can introduce currency speculation.

The government has an economic policy to have a tight leash on the demand for a dangerously out of control USD while stimulating domestic production.

But the current situation has a slight advantage in that it reduces the number of players speculating, makes ostentation costly, forces people to look inward for viable alternatives to foreign goods.

If you say we cannot sustain it for long I have to agree with you. Something has to give. We either start doing more to be competitive in trade and give more support to local industries or devalue and accept the consequences of a weakened currency in a world where not having anything of value to export is in itself suicide. See the example of Greece.

Like I have said earlier the devaluation may not be a cure all and any decision to devalue should be looked at closely from the lens of the benefits (and costs) to the Nigerian and his business interest.

Was is not the same Economist that called Goodluck Jonathan an intellectual buffoon,this time around what would they call Baba.

The height of gullibility is to believe anything just because such thing is proposed by The so called advanced countries. Devaluing the naira will further worsen the state of our economy altogether.
talking from this perspective, Buhari seems to know more economics than the whole 'economist' Crew