₦airaland Forum

Georgry:
The dollar is so popular because it's the world's reserve currency . World leaders gave it that status at the 1944 Bretton Woods Agreement . i read from Robert Kiyosaki's book "conspiracy of the rich" that that's the only reason the US has remain great today, they can simply print paper and exchange it with anything in the world. and that recently China has been trying to get out of the Agreement.

Gave it that status based on what? That’s the question.
Besides u r wrong. There is no agreement. USA withdrew from Brentwood 50 years ago.

CanadaOrBust:
Congrats CanadaOrBust 4 this your glorious FTC!

My question is, if Naija inflation is 11% and US is 1.9%, what keeps the exchange rate steady at $1=N360?
And why would anyone store their money in naira??

Can someone also explain why a piece of paper that costs 10 cents to print in US is worth $100 in Naija?

The Government through the CBN keeps it there by selling dollars at an artificially low price. Like a yam farmer who sells yams to friends and family far below the market price ust to curry favours and maintain 'peace'. He is destined fir bankruptcy as long as his family continues to grow. The solution is either to increase yam cultivation, stop procreating or get a higher earning profession.

Since we are stuck on 2 million barrels or so, our population continues to gallop and we can't seem to diversify quick enough but remain addicted to cheap yams, bankruptcy is a sure bet. Fitch is only giving us a snspshot of where we are and where we will be the rest of this year.

CanadaOrBust:
U seem to know your stuff.
Thanks 4 bringing that site to my awareness. It is a good site to know.
Question still remains though: Since the naira loses so much value each year compared the dollar, why would anyone store money in naira

That is the law. It is iillegal to transact business on Nigerian soil with any other currency other than the naira. You can store but you cannot transact in Nigeria. Same as any other country I know.

Reference:
That is the law. It is iillegal to transact business on Nigerian soil with any other currency other than the naira. You can store but you cannot transact in Nigeria. Same as any other country I know.

Notice I used the word “store” not transact. Besides I’ve never heard of anybody arrested for paying with dollar. Some rich openly spray it at events

Reference:
The Government through the CBN keeps it there by selling dollars at an artificially low price. Like a yam farmer who sells yams to friends and family far below the market price ust to curry favours and maintain 'peace'. He is destined fir bankruptcy as long as his family continues to grow. The solution is either to increase yam cultivation, stop procreating or get a higher earning profession.

Since we are stuck on 2 million barrels or so, our population continues to gallop and we can't seem to diversify quick enough but remain addicted to cheap yams, bankruptcy is a sure bet. Fitch is only giving us a snspshot of where we are and where we will be the rest of this year.

That cannot be the only reason. Here is why:

Even though CBN was propping up the naira all these years rates kept going up and there was this huge and constantly widening disparity between black market and official rates. Then all of a sudden it all disappeared and has stayed so ever since. Since 2017 it has stayed at about 360=1 without any commensurate increase in money from CBN.

Inflation is mainly about the local economy hardly about the exchange rate..i wonder y you guys have all diverted to issues with the change rate rather than inflation

APC and the agency called "Presidency" would soon come outside to defend and discredit this report. ....

bigpicture001:
Inflation is mainly about the local economy hardly about the exchange rate..i wonder y you guys have all diverted to issues with the change rate rather than inflation

Wrong. All imports become part of local economy.
Imports are affected by exchange rate which therefore affects local economy

CanadaOrBust:
Wrong. All imports become part of local economy.
Imports are affected by exchange rate which therefore affects local economy

Inflation is not inport....or is import the Only and main variable affecting inflation in Nigeria...?

CanadaOrBust:
This is not for everyone. Don’t overheat your brain. IMO there is something unexplainable about the whole monetary system. Example, when did the world have a meeting and voted that US dollar should be the standard. Even our erudite OP has already used the term “I don’t know”

Gold was the standard before, but I think the USD took over because of its stability and because of the vibrant US economy.

basty:
They left Nigeria and still monitoring our economy. Monitoring spirit. They predicted that Nigeria economy was not out of recession when it was out of recession.

Fitch rates every economy in the world.
You can't escape them.
The world is globally interconnected, after all you need foreign investors to come in with there money to help your economy.
And Fitch ratings is one of the indices they use to know whether your economy is a good investment or not.

CanadaOrBust:
Gave it that status based on what? That’s the question.
Besides u r wrong. There is no agreement. USA withdrew from Brentwood 50 years ago.

The guy is right. After second world war, US and Europe took over the global finance, and that is how it has been till today. Read up the Marshal Plan, how US funded the reconstruction of Europe after 2nd world war and took the driving seat of global finance.
The US have exclusive right to who governs the world Bank while Europe has exclusive right to who governs IMF.

So the global finance is controlled by the Anglo Saxons. US dollar is the accepted money for business around the world while the interbank offer rate for Bank transactions around the world is Libor London interbank offer rate (if you listen to Blomberg or other business news you will see its used both in Wall Street and other global finance centres).

CanadaOrBust:
Notice I used the word “store” not transact. Besides I’ve never heard of anybody arrested for paying with dollar. Some rich openly spray it at events

I understand your question.
In finance there is what is called hedging.
Personally one can hedge some of his funds in dollar terms.
Example I remember during Jonathan's time Naira had better value. $10000 then was between 1.5 to 1.7 million sometime in 2015/2016 it was 5million then later it has dropped to around 3.6million.

Actually one can convert some of his Naira to dollars and put it in his domiciliary account in Nigerian banks. This way he can hedge himself against the volatility of the exchange rate.

Companies have ways of hedging there transactions and those that don't get burnt.
Example I believe OANDOs woes came when they bought the assets of Conoco Philips with a better Naira to dollars, but after the fall in crude oil prices and depreciation of Naira the hit was too much for them.

CanadaOrBust:
IMO there is something quite mysterious about monetary system. Even though CBN was propping up the naira there was still this huge and constantly widening disparity between black market and official rates. Then all of a sudden it disappeared and has stayed so ever since. Since 2017 it has stayed at about 360=1 without any commensurate increase in money from CBN.

Don't get it twisted. The naira still has multiple rate. 360 is the official rate from CBN. That said, the black market rates converged closer to 360 in 2017 when the VP removed forex controls which buhari introduced in 2015. This forex control was the primary reason for scarcity of forex and by implication round-tripping which led to multiple rates leading to the highest rate of 500 while govt pegged theirs at 198. When buhari came back, he was wise enough to see his folly and keep things the way Osinbajo did it.

CanadaOrBust:
U seem to know your stuff.
Thanks 4 bringing that site to my awareness. It is a good site to know.
Question still remains though: Since the naira loses so much value each year compared the dollar, why would anyone store money in naira

Your second question is an assumption on your part. The elite who hold majority of capital have pulled it out since 2016 which led to loss of jobs. Most big players in Nigeria have refused to embark on new investments. Go check it out. Their money is kept in dollars. That's why you see Nigeria's FDI keep dropping steadily since 2016

Blue3k:
It's about supplying enough forex to supplement demand. $210 million doesn't cover it. It was 36 billion last year. Heres an article about it.

The black market stays steady because of supply and demand. Its the same reason other currency dont values dont radically change day to day.

Moreso, the CBN is battling currency inflation with this defence of the naira and doing nothing about price inflation. What this means is the elite are being fed forex since that's their market, while ordinary Nigerians are paying for it with price inflation. In the long term, the middle class simply collapse

oh

CanadaOrBust:
IMO there is something quite mysterious about monetary system. Even though CBN was propping up the naira there was still this huge and constantly widening disparity between black market and official rates. Then all of a sudden it disappeared and has stayed so ever since. Since 2017 it has stayed at about 360=1 without any commensurate increase in money from CBN.

There was an increase in money. In 2017 they injected $15 billion then 36 billion in 2018. The black market probably reacted higher demand for dollars since the central bank made currency artificially low.

Buckubuck:
Moreso, the CBN is battling currency inflation with this defence of the naira and doing nothing about price inflation. What this means is the elite are being fed forex since that's their market, while ordinary Nigerians are paying for it with price inflation. In the long term, the middle class simply collapse

Agreed it doesn't help the also maintain multiple exchange rates for their priority customers.

CanadaOrBust:
U didn’t answer the question. What or who backs bitcoin. For example, see who backs dollar

Nothing backs BITCOIN . But it has become globally accepted as a very safe means of storing money. It can't be manipulated by any government

Nigeria is a country where people just want power even if they don't know how to use it.

CanadaOrBust:
This is not for everyone. Don’t overheat your brain. IMO there is something unexplainable about the whole monetary system. Example, when did the world have a meeting and voted that US dollar should be the standard. Even our erudite OP has already used the term “I don’t know”

The dollar became the standard after US bought several amounts of Gold from different countries after the 1929 Great Depression and then in 1971, severed the dollar from the Gold Standard.

At the time, everyone in the world used the Gold Standard not the dollar standard. After the severing, lots of countries were left with a large amount of dollars which weren't redeemable for Gold from the US anymore.

I presume several countries use the dollar as the standard because of the relatively low inflation, political stability, and economic size.

Some countries use several currencies to determine their exchange rates tho