₦airaland Forum

MabraO:
If Dey allow market determines it that means we go dey buy pure water 2k per sachet

Things will eventually stabilize bro. That's how the market works. Besides we can't keep burning through our reserves to artificially prop up the naira because money is not an infinite resource - it eventually runs out and for those who know how central banks work, the amount of firepower a central bank has is mostly based on the level of its foreign reserves.

We even thenk God that we have handlers that can argue intelligently at that level. I pray that God kills the adversaries of our ecenomy, starting from the selfish bankers and their sponsors.

MabraO:
That's what's London school of economics will tell u
But Nigerian school of economics will tell u otherwise.
Check price of garri e never come down despite dollar came down from 520 to 390

Dude, i don't think you know how costly the CBN's attempt to prop up the naira is. I will try to explain it in simple terms. To appreciate the naira, the cbn has to sell the dollars it has so that it can buy the excess naira in the market because the lesser the amount of naira floating around the the more the value appreciates. Its basic supply and demand. The value of something is based on the demand for it and the supply. If the demand is high and there is not enough supply it leads to scarcity which in turn pushes up the value (price) of the good. This is what the cbn is doing. They are wasting dollars to keep there currency afloat.

Now all this sounds good and noble until you realize that your reserves are not infinite and that they eventually run out. For a better example, you should look at what's happening in Venezuela right now (or Argentina in 2000 and Thailand in the 90's). There cbn has almost used up there external reserves. It was 30.1 billion dollars in 2011 but today its now around 10 billion and to make matters worse, oil prices have gone down meaning that they cant really replenish there reserves at the same rate anymore. In other words, you are spending much more than you are making.

Oh and one more thing, don't forget that Nigeria has debts and this debts come with interest and they are not cheap. In fact, it is estimated that we are paying close to 30% of our revenue on the interest those debts so when you add all this together you know that Nigeria is not necessarily in the best place financially.

http://money.cnn.com/2016/08/03/news/economy/venezuela-running-out-of-cash/