₦airaland Forum

antispexish:
you are making this statement as if trading in yuan is the only thing pmb is doing.
He is also making efforts on how to reduce imports on products we can't produce.
moreover, there are some products that we need that we cannot produce in the next 10 years, this deal will ease that problem considerably.

There are other ways to force production in nigeria while easing the cost of import that will benefit nigeria and nigerians.

layman's view: toothpick from china= 5 naira
toothpick from naija= 6 naira
solution= importer from china pay 1 naira extra import duty. money will be used to surpport local toothpick production

kayfra:
Then ww will keep importing toothpicks. Ww won't have incentives to diversify and we'll be reliant on dumped Chinese goods.

vikaosi:
That's not exactly what currency swap means. The deal means that for an agreed number of years, the Chinese will allocate a bulk of Yuan to us in exchange of naira. We will later pay some agreed interest rate.

Paretomaster:
yes, we can keen importing toothpicks, simply because China hav a comparative advantage of producing toothpicks than Nigeria, wat I mean is dis, it's not that we don't hav bamboo or something, but importing toothpicks from China is a lot cheaper than producing it here, because China have access to cheap labour, and technology...so in dis case, will u advice we produce toothpicks at say #100, when we can import it at #30?

on d issue of importing everything from China, we can blame ourself for that, because we so much rely on oil as our major source of export, hence neglecting other areas of investment, which reduce us to mono economy , but God willing if we can diversify, d whole economy, like Ebonyi state is doing in term of rice production, Sokoto in d area of Agriculture, and d likes, u can be sure we will have enough to export, and rely less on crude.....

Paretomaster:
yes, we can keen importing toothpicks, simply because China hav a comparative advantage of producing toothpicks than Nigeria, wat I mean is dis, it's not that we don't hav bamboo or something, but importing toothpicks from China is a lot cheaper than producing it here, because China have access to cheap labour, and technology...so in dis case, will u advice we produce toothpicks at say #100, when we can import it at #30?

on d issue of importing everything from China, we can blame ourself for that, because we so much rely on oil as our major source of export, hence neglecting other areas of investment, which reduce us to mono economy , but God willing if we can diversify, d whole economy, like Ebonyi state is doing in term of rice production, Sokoto in d area of Agriculture, and d likes, u can be sure we will have enough to export, and rely less on crude.....

Mindfulness:
And Nigeria has no access to cheap labor with the high unemployment rate? And how difficult is it to get the technology needed t manufacture toothpicks? Having said that, your recommendation in the second paragraph can't be achieved if we reason like you in the first paragraph.

kayfra:
We have a genuine opportunity at the moment to right the ship. It will be a disaster if we don't fix the long term problem for a short term fix by being on China's leash.

At the end of the day, if most of our trades are within Nigeria like in other developed countries, then our fate won't be so dependent on foreign currencies.

Mrokaykay:
Beer Parlour Economics

udumosam23:
I don't see how their devaluing the yuan will affect us, the more they devalue their currency, the cheaper we get their product.

speaking from a layman's point of view though.

kayfra:
Obviously toothpick was used to aggrandize the point. Let's wait for import substitution to leave the conception stage to an actualization stage.

My biggest gripe is holding a significant share of our reserves in yuan. We will be losing money with all sorts of forex plays that are extraneous to the market. Basically China playing with their exchange rates. China loans you in yuan and expects you to pay back in dollars should speak volumes. China holds majority of its reserves in dollars and not yuan should also say something.

Paretomaster:
of course we have access to cheap labour, and technology, but d population of China, and advancement gv it an edge.

on your second point, there are many other area, we hav comparative, and absolute advantage over China, so we can explore that, must bit be in toothpicks production only?

Mindfulness:
Of course not but to import toothpicks is quite funny in a sad way because it is not only about the price the consumers will pay but about companies creating employment and thus giving people purchasing power and thus enabling more investment and more employment and more purchasing power and so it goes on and on and on. Nigeria must use every opportunity it has to encourage investment, manufacturing and thus employment. The toothpick has been the funniest and saddest example but we have to start somewhere and we should start with what is easy and toothpick production is easier than the manufacturing of cars, computers or TVs.


To think that you can manipulate your currency without encouraging investment and the creation of employment is insanity.
Nigeria has been manipulating their currency rate for a long time now and ignoring the fact that currencies reflect a country's productive strength and see what they got out of it.

It is not about the dollar, nor about the Yuan. It is about what we as people have the power to offer to ourselves and the world in terms of productivity.

AntiIPOOP:
The school cert holder has done what a PhD holder could not.

Very simple economics. We buy most of our goods from China, so why must we pay the Chinese in dollars? The Chinese buy a lot of crude oil from us, so why must they pay us in dollars?

So PMB made a deal with the Chinese. We pay for the goods we buy from China in Yuan, the Chinese currency. They buy our crude oil and pay in Yuan.

The exchange rate is to be pegged at 30 Naira to one Yuan or RMB.

So how does it favour us? Simple.

The Yuan is now 6.48 to a dollar. So if you pay 30 Naira to the Yuan, that would be equivalent to 194.4 Naira to the dollar.

Since the dollar exchanges for 199 Naira, you save N4.6. 199 - 194.4 = 4.6. Simple, huh?

In simple terms, PMB has just strengthened the Naira by 9.15%!

And that's not the end of the story. As we begin to deal in the Yuan, the demand for dollar would plummet and this in turn would weaken the dollar. It would crash to around 140 Naira to the dollar.

May God bless PMB.

udumosam23:
I don't see how their devaluing the yuan will affect us, the more they devalue their currency, the cheaper we get their product.

speaking from a layman's point of view though.

AntiIPOOP:
The school cert holder has done what a PhD holder could not.

Very simple economics. We buy most of our goods from China, so why must we pay the Chinese in dollars? The Chinese buy a lot of crude oil from us, so why must they pay us in dollars?

So PMB made a deal with the Chinese. We pay for the goods we buy from China in Yuan, the Chinese currency. They buy our crude oil and pay in Yuan.

The exchange rate is to be pegged at 30 Naira to one Yuan or RMB.

So how does it favour us? Simple.

The Yuan is now 6.48 to a dollar. So if you pay 30 Naira to the Yuan, that would be equivalent to 194.4 Naira to the dollar.

Since the dollar exchanges for 199 Naira, you save N4.6. 199 - 194.4 = 4.6. Simple, huh?

In simple terms, PMB has just strengthened the Naira by 9.15%!

And that's not the end of the story. As we begin to deal in the Yuan, the demand for dollar would plummet and this in turn would weaken the dollar. It would crash to around 140 Naira to the dollar.

May God bless PMB.

AntiIPOOP:
The school cert holder has done what a PhD holder could not.

Very simple economics. We buy most of our goods from China, so why must we pay the Chinese in dollars? The Chinese buy a lot of crude oil from us, so why must they pay us in dollars?

So PMB made a deal with the Chinese. We pay for the goods we buy from China in Yuan, the Chinese currency. They buy our crude oil and pay in Yuan.

The exchange rate is to be pegged at 30 Naira to one Yuan or RMB.

So how does it favour us? Simple.

The Yuan is now 6.48 to a dollar. So if you pay 30 Naira to the Yuan, that would be equivalent to 194.4 Naira to the dollar.

Since the dollar exchanges for 199 Naira, you save N4.6. 199 - 194.4 = 4.6. Simple, huh?

In simple terms, PMB has just strengthened the Naira by 9.15%!

And that's not the end of the story. As we begin to deal in the Yuan, the demand for dollar would plummet and this in turn would weaken the dollar. It would crash to around 140 Naira to the dollar.

May God bless PMB.

kayfra:
Just wait till China devalues the yuan like they normally do. You'll scream bloody murder.

Mrokaykay:
Beer Parlour Economics

Paretomaster:
of course we have access to cheap labour, and technology, but d population of China, and advancement gv it an edge.

on your second point, there are many other area, we hav comparative, and absolute advantage over China, so we can explore that, must bit be in toothpicks production only?

Mindfulness:
Of course not but to import toothpicks is quite funny in a sad way because it is not only about the price the consumers will pay but about companies creating employment and thus giving people purchasing power and thus enabling more investment and more employment and more purchasing power and so it goes on and on and on. Nigeria must use every opportunity it has to encourage investment, manufacturing and thus employment. The toothpick has been the funniest and saddest example but we have to start somewhere and we should start with what is easy and toothpick production is easier than the manufacturing of cars, computers or TVs.


To think that you can manipulate your currency without encouraging investment and the creation of employment is insanity.
Nigeria has been manipulating their currency rate for a long time now and ignoring the fact that currencies reflect a country's productive strength and see what they got out of it.

It is not about the dollar, nor about the Yuan. It is about what we as people have the power to offer to ourselves and the world in terms of productivity.

asuustrike2009:
It will be to China's advantage because they will export more of their products to us. The problem is what are we exporting to them apart from crude oil? those guys are developing technology that they might produce car that use sun or water, what's our faith?

AntiIPOOP:
And so? If Nigeria needs to acquire China's products and China needs to acquire Nigeria's crude oil. We could arrange to swap currencies by establishing an interest rate, an agreed upon amount and a common maturity date for the exchange. Simple.

abdulwastecx:
It is not the responsibility of government to create employment or industries, that is the role of the organized private sector. We all know government provide basic infrastructure to encourage production but when the resources are scarce people think out of the box.

The solution to Nigeria problem is small scale productive ventures, we need more road side furniture makers, fabricators, electronics, food processor, computer repairer etc. We need more small foundry shop, small iron smelting, company, small food processing plants than all those filling stations along the road.

Nigerians don't like challenging investment that takes the to yield dividends, they prefer to build 20 mega filling station on a kilometer stretch of road

989900B:
1. Do you know that if we have xbillion amount of dollars in our reserves, does not literally mean it's all in US dollars?

2. Even from before, we did keep some Yuan in our 'basket of currencies'.

3. We keep other currencies like GBP, Euro and some few other currencies, and gold too.

4. We are only increasing our Yuan reserves, and trading directly, rather than going via the $ route (which is a better thing for our economy, considering we have a huge trade volume to and from China . . . times are changing, it's not like the 70s,80s, or 90s . . . the world's trade and ours from then has greatly changed. We can't be applying the monetary policies of 30 years ago in a fast evolving world -- we've gotta evolve with it).

5. ATM, the dollar is too strong for it's own good, and the US is worried about that too -- they'r slowly feeling the effect.