₦airaland Forum

RabbiDoracle:
You don't seem to understand how free float works. Do you?

İf you free float, it is supply and demand forces that will drive the currency prices. CBN will have no control over it. This will be worst than devaluation. Currency speculators will finish us. Any intervention by CBN will be seen as capital controls.

Any slight event in Nigeria like rescheduling elections or killings by BH will send the Naira to 1,000 or more. And this will cause the severest form of inflation especially if your economy is import dependent.

The best we can do in Nigeria is to develop our local industries and depend less on foreign goods. Made in Nigerian goods should be replaced with foreign goods.

Like someone mentioned, develop infrastructure so that it will attract FDİ. İmprove security greatly. Security is messy in Nigeria. Assets can't be protected where there is no security.

RabbiDoracle:
That is what you are made to believe oga!

Look at the economies of other oil nation's like UAE, Qatar, Saudi Arabia, they are not free floating. İs this peg affecting development and FDİ? Even the Chinese economy still has element of central bank control.

İs UAE not rapidly developing? Why must you tie development to free floating of currency?

I believe proper management of resources will go a long way to develop the economy. İf all the funds earmarked for development of infrastructures from 1960 till date were spent on the project and not embezzled, we will not be struggling with dearth of infrastructure. But they loot and mismanage and you come here to say freefloat.

Turkey that free floated nko, come and see wounding. İf the ruling party sneezes, lira tanks. İf they say this, it tanks again.

Even after free floating, lots of countries still introduce currencies controls when there is crisis to prevent rapid deprecation of their currencies.

Godlylifeoneart:
I mentioned it yesterday that Al JUBRIL bubu is an anti devaluation. He dictates the exchange rate for EMEFIELE.
A lot of people do not know the economic implications of pegging the currency in a nation that import almost everything from China.
We import what we have and export what we lack.
As we are talking now, the nation of Rwanda, Ethiopia, Kenya are far ahead of Nigeria. You need to follow the Kenyan Stock Exchange and see what foreign portfolio investors are doing to the economy of that Nation.
All the money that supposed to be judiciously used to provide quality health care for the masses are being used to defend the Naira. Today, the life expectancy in Nigeria is dropping at geometrical rate.
We still have one of the highest maternal mortality in the world.
Same for infant mortality.
It will get to a stage, the strength of the FGN to defend the Naira will collapse.
If you are into Forex, you will notice the US $ is never static, up and down same for pound and Euro.
The strength of the Naira should be determined by the true reflection of our country micro and macro economies indices, Not by the selfish interest of Bubu.
Pegging is indeed causing more contracting economy for Nigeria.
The issue of inflation can be addressed by competition, we all can recall the price of a Sim card at inception of GSM and the price today, the price of the earlier and archaic handsets and the price of a modern Android.
The price of the 1st generation hp laptop and the price of the modern one.
Government should not be overprotective of the masses, they should rather provide the enabling environment for investors. Like I mentioned yesterday, the universal rule of money states that money can never be static, it must keep changing hands.
Same is applicable for the economy of a prosperous nation, it is not the numbers of Millionaires you have that matter but the no of people that are able to touch the million on daily basis. I. E how many hands are able to exchange the million daily.
In 2016,An article was published on the billions of dollars in fallow account , idle in deposit money banks in Nigeria. You will be amazed that Nigerians could bail out this nation with dollars in individual domicilary accounts.
The American keeps moving dollars to foreign nations all in an effort to prevent devaluation.
If government is serious and floats the naira, there will be less $ in fallow dom accounts.
The saving grace of FGN action in pegging the naira is actually the high inflow from diaspora remittance. Free money for the government.
One may even deduce that diaspora remittance is now one of the mainstay of Nigeria economy.
Despite this, the government will waste this money yearly and transfer it to the government of Saudi Arabia and Israel in the name of religious pilgrimage.
The event of the past few days in the Nigeria bourse is the true reflection of Nigeria economy.
For those that do not know a vibrant NSE will impact positively on the masses not just you that made a profit, In a way your profit will transform into spending, your spending will promote another man's business and the cycle continue. This is how a true economy should be. Once the mirror image of Nigeria economy is battered it will definitely affect all and sundry.
Now, the government is contemplating increment in Vats, let's see what the effect would be on the economy.
Finally, i fink d govt has overdefended the naira with an analogue idea. Time to wake up and embrace digital economy, not just currency devaluation vs pegging.
Cheers

You don't seem to understand how free float works. Do you?

İf you free float, it is supply and demand forces that will drive the currency prices. CBN will have no control over it. This will be worst than devaluation. Currency speculators will finish us. Any intervention by CBN will be seen as capital controls.

Any slight event in Nigeria like rescheduling elections or killings by BH will send the Naira to 1,000 or more. And this will cause the severest form of inflation especially if your economy is import dependent

Like someone mentioned, develop infrastructure so that it will attract FDİ. İmprove security greatly. Security is messy in Nigeria. Assets can't be protected where there is no security.

maishai:
You talk like our politicians on NTA news ,,,, ever since Muritala was assasinated, no Politician moves around in the masses car, when you get to the national assembly house you frequently meet german marketers of mercedes and maybach peddling to our politicians the latest bullet proof product... So you want Saraki to drive GAC or hyundai to work daily,you want DJ cuppy to use tecno phones.... I remember during Goodlucks daughters wedding Gold plated Iphones were given as souverneirs to those that attended.....

The truth is that the elites know fully well that a floating currency will shift the power base away from them and they dont want this they would rather stick with the status quo and remain at the top than to see things better and hold no powerful positions in the new scheme of things

brandable:
cc:
grandstar
omohayek
4play
Lordadam

omohayek:
The person you've quoted was just writing a lot of nonsense; to see why this is so, let's start with a simple thought experiment. Suppose you have just two countries A and B, each with their own private currencies. If A and B both have fixed GDPs, and both have fixed desires for goods from each other, then under what circumstances could the relative value of their currencies ever change, even when floated? Answer: when one of them decides to print more money than its real growth can support.

If everything else stays the same, but country B decides to grow the amount of its currency in circulation by 10% while country A keeps its own supply fixed, then it should be obvious that 1.1x of currency B will be chasing the same amount of currency A, which will lead to currency B weakening to only 1/1.1 = 91% of its former value against A. Attempting to "fix" the exchange rate by decreeing that the relative value of A to B must remain 1:1 is unenforceable, as the citizens of A cannot be forced to give up their money for less than what they know it's worth, so the only option open to the leaders of country B is to pretend to "strengthen" their currency by diverting their own resources to subsidizing the true cost of currency A for some subset of the citizens of B. Naturally, this means less spending on essentials like education, health, decent roads, clean water, security, etc.

The long and short of it is that the long-term depreciation of the Naira has nothing to do with speculators, and everything to do with a succession of Nigerian governments printing more money than the country's economic growth could warrant, leading to persistently high inflation. If the value of even basic domestic goods is eroded by such policies, why is anyone surprised that the same is also true for foreign goods (or rather, stores of value) like US$? "Strong Naira" policies of the kind favored by Buhari are utterly useless at doing anything other than diverting scarce resources to a few well-connected individuals, who can then make risk-free profits through "round-tripping".

The only way to keep the Naira "strong" over the long term is through sound monetary policies, which means fiscal restraint in the face of public pressures (e.g. for perpetually higher minimum wages for government workers, or endless bailouts for indigent states), as well as policies that draw in foreign investment, e.g. large-scale privatizations, deregulation and a fully convertible floated currency. If decreeing exchange rates were an answer to anything, Venezuela wouldn't have become a basket-case plagued with hyperinflation.

As for the currency-peg idea, many countries have tried that with seeming success for at least a few years, but in the long-term the only ones that have been able to keep with it are those with external reserves so massive they could completely dollarize their domestic economies with no effort. A currency-peg against the US Dollar is basically dollarization without the name, with all the disadvantages that implies: it means giving up all control over domestic monetary policies, which are now set by the US Federal Reserve with only the US economy in mind. Both versions of the CFA Franc essentially do this, except they are pegged against the Euro: this keeps inflation rates in French-speaking West African countries low and their currencies "strong", but the overly-tight monetary policy it imposes has also kept their average economic growth from keeping up with other African countries (including Nigeria before Buhari took power in 2015).

Nigerians need to stop fetishizing a "strong Naira" and instead concentrate on keeping inflation low (but not too low). One of the things that will help achieve this is increased FDI inflows, but this will never happen as long as investors can't be sure they'll be able to take their money out without being cheated. In consequence, Buhari's "strong Naira" policy actually undermines the growth Nigerians want, rather than helping it.

Mpeace:
Where all this pple follow come?

That is what you are made to believe oga!

Look at the economies of other oil nation's like UAE, Qatar, Saudi Arabia, they are not free floating. İs this peg affecting development and FDİ? Even the Chinese economy still has element of central bank control.

İs UAE not rapidly developing? Why must you tie development to free floating of currency?

I believe proper management of resources will go a long way to develop the economy. İf all the funds earmarked for development of infrastructures from 1960 till date were spent on the project and not embezzled, we will not be struggling with dearth of infrastructure. But they loot and mismanage and you come here to say freefloat.

Turkey that free floated nko, come and see wounding. İf the ruling party sneezes, lira tanks. İf they say this, it tanks again.

Even after free floating, lots of countries still introduce currencies controls when there is crisis to prevent rapid deprecation of their currencies.

courage89:
Free floating of naira is a recipe for disaster. It makes difficult, if not impossible to have a manufacturing economy. It makes it difficult for businesses to plan. It makes it difficult for us as Nigerians to have control of our economy, meaning Nigeria will continue to be subject to the dictates of foreign countries (hedge funds, foreign banks and others).

Let's look at a simple analysis. Majority of our manufacturing system depends on imports of raw materials. Every time we devalue, or naira weakens for some reasons. It means importers have to pay more for their raw materials. This additional expenses will have to be added to justify increase in price. Leading to inflation, instabilities and others.

Also, we have balloning government dollar denominated debt. Weakening /floating naira will have a significant economic effect on Nigeria. Our ability to fund infrastructure, pay workers and service high debt based on naira devaluation would be severely impacted. This is also going to increase Nigeria's financial risks; curtail its ability to raise international funding, increase its cost of funding or this effect on corporate bodies that need to raise foreign capital?

By simply floating the naira, you make it impossible to predict the bottom. Our international hedge fund companies, banks and others will see to that. Imagine having a situation where $1 trades for 1000 naira? What would happen to jobs? What would happen to inflation and mpr? What would happen to banks cost of funds? What would happen to manufacturers, most especially those that imports raw materials? What happens to their local and international competitive ability? What would happen to power projects that imports equipment and raw materials? What would happen to the economy on the long run?

Just because some economies adopted policies that worked or did not work for them does not mean we should blindly follow. Our economic policies should be tailored to solving our fundamental problems including; creating jobs, improving manufacturing system, creating wealth for the masses, improving cost of living, improving middle class, making Nigeria better. Devaluation, free flotation of naira is not going to solve those problems. It will only regress the economy further. We have a lot of data to prove this.

omohayek:
The person you've quoted was just writing a lot of nonsense; to see why this is so, let's start with a simple thought experiment. Suppose you have just two countries A and B, each with their own private currencies. If A and B both have fixed GDPs, and both have fixed desires for goods from each other, then under what circumstances could the relative value of their currencies ever change, even when floated? Answer: when one of them decides to print more money than its real growth can support.

If everything else stays the same, but country B decides to grow the amount of its currency in circulation by 10% while country A keeps its own supply fixed, then it should be obvious that 1.1x of currency B will be chasing the same amount of currency A, which will lead to currency B weakening to only 1/1.1 = 91% of its former value against A. Attempting to "fix" the exchange rate by decreeing that the relative value of A to B must remain 1:1 is unenforceable, as the citizens of A cannot be forced to give up their money for less than what they know it's worth, so the only option open to the leaders of country B is to pretend to "strengthen" their currency by diverting their own resources to subsidizing the true cost of currency A for some subset of the citizens of B. Naturally, this means less spending on essentials like education, health, decent roads, clean water, security, etc.

The long and short of it is that the long-term depreciation of the Naira has nothing to do with speculators, and everything to do with a succession of Nigerian governments printing more money than the country's economic growth could warrant, leading to persistently high inflation. If the value of even basic domestic goods is eroded by such policies, why is anyone surprised that the same is also true for foreign goods (or rather, stores of value) like US$? "Strong Naira" policies of the kind favored by Buhari are utterly useless at doing anything other than diverting scarce resources to a few well-connected individuals, who can then make risk-free profits through "round-tripping".

The only way to keep the Naira "strong" over the long term is through sound monetary policies, which means fiscal restraint in the face of public pressures (e.g. for perpetually higher minimum wages for government workers, or endless bailouts for indigent states), as well as policies that draw in foreign investment, e.g. large-scale privatizations, deregulation and a fully convertible floated currency. If decreeing exchange rates were an answer to anything, Venezuela wouldn't have become a basket-case plagued with hyperinflation.

As for the currency-peg idea, many countries have tried that with seeming success for at least a few years, but in the long-term the only ones that have been able to keep with it are those with external reserves so massive they could completely dollarize their domestic economies with no effort. A currency-peg against the US Dollar is basically dollarization without the name, with all the disadvantages that implies: it means giving up all control over domestic monetary policies, which are now set by the US Federal Reserve with only the US economy in mind. Both versions of the CFA Franc essentially do this, except they are pegged against the Euro: this keeps inflation rates in French-speaking West African countries low and their currencies "strong", but the overly-tight monetary policy it imposes has also kept their average economic growth from keeping up with other African countries (including Nigeria before Buhari took power in 2015).

Nigerians need to stop fetishizing a "strong Naira" and instead concentrate on keeping inflation low (but not too low). One of the things that will help achieve this is increased FDI inflows, but this will never happen as long as investors can't be sure they'll be able to take their money out without being cheated. In consequence, Buhari's "strong Naira" policy actually undermines the growth Nigerians want, rather than helping it.

courage89:
Free floating of naira is a recipe for disaster. It makes difficult, if not impossible to have a manufacturing economy. It makes it difficult for businesses to plan. It makes it difficult for us as Nigerians to have control of our economy, meaning Nigeria will continue to be subject to the dictates of foreign countries (hedge funds, foreign banks and others).

Let's look at a simple analysis. Majority of our manufacturing system depends on imports of raw materials. Every time we devalue, or naira weakens for some reasons. It means importers have to pay more for their raw materials. This additional expenses will have to be added to justify increase in price. Leading to inflation, instabilities and others.

Also, we have balloning government dollar denominated debt. Weakening /floating naira will have a significant economic effect on Nigeria. Our ability to fund infrastructure, pay workers and service high debt based on naira devaluation would be severely impacted. This is also going to increase Nigeria's financial risks; curtail its ability to raise international funding, increase its cost of funding or this effect on corporate bodies that need to raise foreign capital?

By simply floating the naira, you make it impossible to predict the bottom. Our international hedge fund companies, banks and others will see to that. Imagine having a situation where $1 trades for 1000 naira? What would happen to jobs? What would happen to inflation and mpr? What would happen to banks cost of funds? What would happen to manufacturers, most especially those that imports raw materials? What happens to their local and international competitive ability? What would happen to power projects that imports equipment and raw materials? What would happen to the economy on the long run?

Just because some economies adopted policies that worked or did not work for them does not mean we should blindly follow. Our economic policies should be tailored to solving our fundamental problems including; creating jobs, improving manufacturing system, creating wealth for the masses, improving cost of living, improving middle class, making Nigeria better. Devaluation, free flotation of naira is not going to solve those problems. It will only regress the economy further. We have a lot of data to prove this.

Godlylifeoneart:
We do not need to argue endlessly on the trending subject matter.. DEVALUATION VS FLOATING.
MY FINAL VIEW ON THE SUBJECT MATTER...
If you are an investor and you are against floating, do not complain when the NSEASI PLUMET TO SUB 28000, SINCE THE MARKET IS NOW FALLING FREELY.
I MADE A REFERENCE RECENTLY THAT THE JOHANNESBURG STOCKS EXCHG HAS GAINED ABOUT 4000 POINTS FROM MARCH 2019 TILL DATE.
BE IT FLOATING OR DEVALUATION, THE GOVT THROUGH THE CBN WILL ALWAYS HAVE A CONTROL.
WE ARE RUNNING A VOODOO ECONOMY. THE STRENGTH OF NIGERIA ECONOMY IS WHAT NSE IS SHOWING US. ONCE YOUR CAPITAL MARKET IS PERFORMING POORLY, IT MEANS THE ECONOMY IS ALSO POOR.
THE FIRST NEWS I READ TODAY

https://www.nairaland.com/5125735/naira-climbs-n360.55-cbn-injects


CBN HAS JUST DEFENDED THE NAIRA WITH $220M.
LET'S CONTINUE, WE ARE INTO IT TOGETHER.
NO ONE IS GOING TO GIVE UP ON NIGERIA. OUR DARLING COUNTRY,WASTING SCARCE RESOURCES THAT CAN TRANSFORM US INTO EXPORTING NATION TO DEFEND THE NAIRA WEEKLY IS OUR WAY.
NEXT WEEK THE GOVT MIGHT NEED TO DEFEND THE NAIRA BY $250M COZ THE INVESTORS THAT ARE QUITTING THE MARKET BY PORTFOLIOS OFFLOADING NEED THE $ TO EXIT NSE.



KEY TAKEAWAYS
A floating exchange rate is one that is determined by supply and demand on the open market.
A floating exchange rate doesn't mean countries don't try to intervene and manipulate their currency's price, since governments and central banks regularly attempt to keep their currency price favorable for international trade.
A fixed exchange is another currency model, and this is where a currency is pegged or held at the same value relative to another currency.
Floating exchange rates became more popular after the failure of the gold standard and the Bretton Woods agreement.
Bye... Wishing us all a bullish market today.. Amen

veecovee:
BLESSING, ANOINTING, FAVOUR, UPLIFTING, ETC. ATTRACTS
THE DEVIL ...

https://www.nairaland.com/3560501/holineness-righteousness-revival-daily-messages/21#77412410

drnelson:
Yes pastor give us more blessing


Save us from these Children of hate wanting us to kill our currency so they can gain from it.


God help us defeat the satanic members on this thread

Mpeace:
Where all this pple follow come?

drnelson:
Cee dis maga chimp

He even carry god inside this name come blabber abt floating Naira

The banana dey float inside ur yansh Comot am

Yayira:
Hey Hey you this Dr no be by force to agree with weytin him write ok ? No need for insults.. abi na too much yansh wey you don see for your Hopital Dey disturb you ?

drnelson:
Don’t provoke me small yansh sister


I will abuse children of devaluation upandan


Again and again and the upandan again

drnelson:
Don’t provoke me small yansh sister


I will abuse children of devaluation upandan


Again and again and the upandan again

Yayira:
Na today! Abeg provoke! DrYash

drnelson:
Pls don’t derail the convo here....


Maybe you dey inside bed with dis devaluation champanzee that get god inside his name


Carry your Wahala go