₦airaland Forum

989900B:
Thank you.

My question is, how do you 'free float' the Naira against the dollar when every other factor is skewed against the Naira -- that's suicide -- like locking me in a cage-fight without weapons with John Cena.

989900B:
Thank you.

My question is, how do you 'free float' the Naira against the dollar when every other factor is skewed against the Naira -- that's suicide -- like locking me in a cage-fight without weapons with John Cena.

drss1:
wonders shall never end! so dem don dey ban pipul for posting economic facts on dis thread pathetic! nobody go shut me up on dis thread!

musicwriter:
Don't mind them.

They don't know if we officially devalue or free-float to N320 to $1 today, the black market would also free-float to N500 to $1, immediately!. Because, the CBN would continue not to have dollar!!.

There's no dollar!!, there's no dollar!!.

GworoChewinMaga:
The naira has been subjected to partial devaluation just like in Egypt.

Buhari met the naira at 178 as at may 29. Today the CBN is selling at 215 to a dollar but restricting access to it exactly what the Egyptians are doing and the outcome is strikingly similar to what is going on in Nigeria and the senseless op has the audacity to claim Egypt failed in the same currency policy but Nigeria is winning even where the outcomes are the same for the two nations.

How daft can zombies be?

GworoChewinMaga:
The naira is already devalued since the CBN can not meet up with local forex demands and has asked manufacturers, banks, businesses and the general public to source for forex else where.

As things stand now our foreign reserves does not mean sh1t as nobody but buhari and his cronies have access to it.

This is why NNPC is the only sole importer of PMS with Buhari's cronies as agents and why fuel scarcity will forever persists.

The economics of the Naira has taken a back seat to the politicking of the Naira and it has no benefit to any one.

989900:
Egypt's war on black market currency traders is not going to plan. One month after a devaluation that was supposed to ease an acute dollar shortage in the banking system, clandestine business is booming in cafes, shops and flats.

The central bank, which hoped the 13 percent devaluation would relieve downward pressure on the Egyptian pound, has cracked down on exchange bureaux trading far outside its set range.

And yet the gap between the official and black market rates, which briefly narrowed with the devaluation, is now wider than ever, with dealers buying and selling dollars for 20 percent or more above the official rate of 8.78 pounds.

Traders say the crackdown has only exacerbated the crisis. People with dollars are shunning the official financial system, starving it of foreign currency. This is putting yet more pressure on the pound, with potentially dire consequences for inflation, investors' confidence and economic growth.

"No one sells dollars to the banks any more. They all prefer to go to the black market which will pay them more," said one banker who asked to remain anonymous. "The dollars don't come into the banking system any more and the central bank's dollar reserves are not enough to support the country's import needs."

Egypt has struggled to restore growth since the 2011 uprising that toppled President Hosni Mubarak scared away tourists and foreign investors - vital sources of the foreign currency it needs to import everything from fuel to food.

Eradicating the black market is essential to restoring investors' confidence, easing the risk that the pound's volatility will erase their profits.

Already, foreign investors are struggling to repatriate earnings because the central bank's reserves have more than halved since 2011 to about $16.5 billion in March. This has made it hard for them to convert pound earnings into foreign currency through the banking system.

Even before last month's devaluation, which was accompanied by the launch of financial instruments aimed at attracting hard currency to the banks, the central bank had resorted to legal force. In February, it revoked the licenses of four exchange companies with 27 offices.

Since then, the expected influx of dollars has failed to materialize and this month it referred 15 more exchange firms to public prosecutors. Then on Wednesday the central bank said it had revoked the licenses of nine more companies for manipulating prices of dollars in the parallel market.

REPEATED OFFENCES

"The decision ... comes after repeated offences by these companies which distorted the exchange market and has harmed the national economy," said Gamal Negm, deputy central bank governor, in remarks published by the state news agency MENA.

Negm added that the bank is working on a new law that could raise the punishment for violators to a prison sentence.

Bankers say the clampdown has backfired because as it became riskier to deal on the black market, the dollar strengthened against the pound and people began hoarding foreign currency to speculate on the rate. This pushed the U.S. currency yet higher, and the pound hit a record low of 11.50 to the dollar this week.

"Traders are speculating on the dollar and those who need dollars for imports can't find the dollars and must buy them from traders and speculators, so the black market rate is putting the Egyptian economy in a tight spot," said Ziad Waleed, an economist at Beltone Financial.

Any further official devaluation would threaten to fuel inflation, a politically explosive development in a country where millions live in poverty. That leaves the central bank with few weapons in its arsenal.

One trader described the situation as a standoff, saying that while the central bank is trying to punish black market dealers, it does not have the resources to fight them.

"We will secure ourselves and we will continue to work and we will do it carefully, as if we were dealing in drugs. We will hoard the dollars and we won't sell. Where will the central bank get dollars from?" he said.

EASY EVASION

Just a few blocks away from one Cairo exchange bureau, a trader sipped coffee at a downtown cafe as he closed deals over the telephone away from the prying eyes of the authorities.

"Do you have riyals?" he asked another trader, quoting the black market rate for the Saudi currency. "I will take all of it."

This is one example of how easily traders are adapting to tighter oversight.

They quote official rates at the exchange bureaux, which are closely monitored, without making any deals. Business is then done at cafes or elsewhere at black market rates, dealers said.

Outside the bureaux, young men puff on cigarettes and whisper to customers: "Dollars? Euros?"

"No one buys or sells at the official rate, so as soon as the customer leaves there are guys standing outside to catch them and deal with the unofficial rates," said another exchange bureau manager in downtown Cairo.

It should be easy to clamp down on these men, but traders say agents of the Interior Ministry's General Department of Public Funds Crime Investigation Unit, which is responsible for tackling illegal trading outside the bureaux, are easily bribed.

Reuters spoke to 10 traders who either work, own, or collaborate with exchange bureaux and all said that their operations run smoothly thanks to bribes and favors that are given to Public Funds forces and central bank employees.

"It does not put a dent in profits," said one exchange bureau worker, adding that a single branch of the company he works for makes around 6 million Egyptian pounds ($675,680 at the official rate or about $522,000 on the black market) in profit each month on black market trades alone.

The Interior Ministry spokesman did not respond to requests for comment and officials at the central bank, which does not have a spokesman, were not available for comment.

Exchange bureaus are licensed to operate with a certain amount of funds but most have offices or apartments where business is carried out off the books.

"If they close the exchange bureaux we will continue to work from the streets and this way the dollar price will reach 13 or 15 pounds per dollar," one trader said.

LUGGAGE SHOPS AND CARS

President Abdel Fattah al-Sisi has made economic revival a priority but is also mindful of protecting the poor, with his government slowing cuts to subsidies which keep down some food and fuel prices but burden the budget.

If the central bank is forced into repeated devaluations to keep up with the black market, this would be a nightmare for authorities trying to stabilize the economy.

But so is the current situation, where the public sector functions at an official exchange rate wholly disconnected from the rest of the economy which has to deal on the black market.

Black market activity is fast and efficient.

In Cairo, a luggage store manager took 20,000 pounds from his wooden desk in return for $2,000, a deal made with a customer who had been turned down at the exchange bureau next door. The operation took under a minute.

One trader showed Reuters a car he uses to transfer funds to clients in rubbish bags hidden in the boot. "The largest amount this car carried is the equivalent of 11 million Egyptian pounds," he said proudly.

http://www.reuters.com/article/us-egypt-dollars-blackmarket-idUSKCN0XI1W9

@Modath: Pls. summarize for them you know who.

aeronot:
Lets stop deceiving ourselves, if you want to do an online transaction the banks are charging black market rates 319, it is only when u are receiving money or changing dollar to naira the banks gladly charge 199! We should stop all this deceit!

aeronot:
Lets stop deceiving ourselves, if you want to do an online transaction the banks are charging black market rates 319, it is only when u are receiving money or changing dollar to naira the banks gladly charge 199! We should stop all this deceit!

989900:


I guess this will keep them naysayers quiet for some while about their 'devaluation El-dorado'.

omonnakoda:
How is it rubbish to reproduce a "factual" report verbatim. did he add any opinion. You are just too rude. The fact that you are online is not a licence for gratuitous unruliness.

GworoChewinMaga:
The naira is already devalued since the CBN can not meet up with local forex demands and has asked manufacturers, banks, businesses and the general public to source for forex else where.

As things stand now our foreign reserves does not mean sh1t as nobody but buhari and his cronies have access to it.

This is why NNPC is the only sole importer of PMS with Buhari's cronies as agents and why fuel scarcity will forever persists.

The economics of the Naira has taken a back seat to the politicking of the Naira and it has no benefit to any one.

ichidodo:
[color=#1980BC]What is there to be thankful,you f**king propagandist? Egypt has refused to devalue their currency,at least the most they have done is partial devaluation just like Nigeria, that is why the blackmarkets are thriving thus you have customers patronizing them instead of the Banks and enabling extreme pressure on their currency just as you have the naira.....Now,F**k off.[/color]

4Play:
The sad thing is their obliviousness to their profound economic illiteracy. He puts up an article about the ill-fated move by the Egyptian government to fix exchange rates, instead of leaving it to market supply and demand to determine as economists recommend, and proclaims that this illustrates that the Nigerian government is vindicated!

To the contrary, the Egyptians are doing what the Nigerians are doing and are predictably failing. The fact that they have chosen to devalue a bit doesn't refute the fundamental diagnosis - governments cannot simply fix echange rates unless they have sufficient forex reserves to back it up. Nigeria does not have the reserves to fix the Naira at a particular price level so insisting on doing so will cause unnecessary hardship and creates opportunities for corruption via round-tripping. Why is this so difficult for Nigerians to understand?

989900:


I guess this will keep them naysayers quiet for some while about their 'devaluation El-dorado'.

stereo:
Did you read the headline that the OP used? It called for the response he got. Get it?

MrPresident1:
Buhari will be declared lord and saviour, the messiah of Nigeria, very soon when the Yuan is backed with gold and the Dollar starts to flounder.

A 'most timely and fortuitous' move away from the Dollar to the Yuan in the nick of time that saved Nigeria from being affected by the economic disaster in the west.

Buhari will be hailed as the wisest leader ever liveth.

ichidodo:
[color=#1980BC]Yep..And the troglodytes expect us to hold hands and sing kumbaya for this shyte piece of propaganda?? Maybe they forget we aren't zombies like them....the f**kin lot.[/color]

aeronot:
Lets stop deceiving ourselves, if you want to do an online transaction the banks are charging black market rates 319, it is only when u are receiving money or changing dollar to naira the banks gladly charge 199! We should stop all this deceit!

aeronot:
Lets stop deceiving ourselves, if you want to do an online transaction the banks are charging black market rates 319, it is only when u are receiving money or changing dollar to naira the banks gladly charge 199! We should stop all this deceit!

dragunov:
How is it that you wailers love using the word 'propaganda' like its some kind of fancy word with a meaning so versatile it can be applied to any discourse? Any small thing "PROPAGANDA ". Don't you guys have some other word to articulate your frustrations?

dragunov:
How is it that you wailers love using the word 'propaganda' like its some kind of fancy word with a meaning so versatile it can be applied to any discourse? Any small thing "PROPAGANDA ". Don't you guys have some other word to articulate your frustrations?

MrPresident1:
Buhari will be declared lord and saviour, the messiah of Nigeria, very soon when the Yuan is backed with gold and the Dollar starts to flounder.

A 'most timely and fortuitous' move away from the Dollar to the Yuan in the nick of time that saved Nigeria from being affected by the economic disaster in the west.

Buhari will be hailed as the wisest leader ever liveth.

GworoChewinMaga:
But OP what you are pointing out in Egypt is exactly what is going on in Nigeria with the huge gap between the parallel market and the official rates.


Did you even read the rubbish you posted?