Are you for or against Naira Devaluation?
There has been an ongoing debate in the country on whether to devalue or not to devalue the naira with calls from world powers asking the President to okay Naira devaluation...
The debate became fiercer yesterday with Edo State Governor, Comrade Adams Oshiomhole joining the discussion.
The Governor, who did not hide his disdain for a weaker naira, said a devaluation of the local currency at this time would make the poor poorer.
Oshiomhole, who spoke at the maiden edition TheCable Colloquium with theme: The Naira on Trail: To Devalue or Not? said the rich, who constitute about five per cent of the population; portfolio investors and collaborative private sector operators canvassing for devaluation will benefit from the decision.
He said devaluation of the naira at this time when Nigeria’s productive base is very low and the desire for foreign goods keep rising will be a big mistake.
The Governor said previous devaluations never benefitted the poor and workers, whom he described as the best economists because of their prudent management of the N18, 000 minimum wage in the face of declining naira value against world currencies.
But Managing Director, Financial Derivatives of Nigeria Limited, Bismark Rewane, said naira devaluation is the answer to Nigeria’s economic woes. The economist said there is a big difference between economic drama and reality adding that people denying the need for devaluation are same people that keep stealing from the people.
He said those who want the policy to stay, same people want to steal the money. They have vested interest not to devalue, pretending to be protecting the naira adding that it is all about competitiveness because the naira can also appreciate if we get things right.
Rewane said that in the last 10 years, Western Union, Thomas Cook and others were bringing dollars to the country. “The CBN said it sold $8 billion to bureaux de change (BDCs) in nearly two years but who are the owners of these BDCs? The issue is if you are a manufacturer and you get dollar at N197 from the CBN to import raw materials. There are two decisions to make.
Manufacture the goods and sell as if you bought the at N310 to dollar because of the wide gap between the official and parallel market rates, or open a Letter of Credit and refuse to import. Then roundtrip the money and make 50 per cent outright profit,” he said.
Rewane said devaluation will solve such problem because it will reduce the widening gap between the official and parallel market rates. He said many of the people asking government not to devalue the naira is because they want to abuse and steal the fund, pretending to be protecting the naira.
Rewane said devaluation will solve such problem because it will reduce the widening gap between the official and parallel market rates. He said many of the people asking government not to devalue the naira is because they want to abuse and steal the fund, pretending to be protecting the naira.
“I can tell you, there are vested interests. They pretend to be protecting and defending the naira, but in reality, they are not. In 1987, the naira depreciated by 76 per cent and by 20 per cent in 2009. But when oil prices rose, did they allow the naira to appreciate?”
He said that after the drama of not devaluing the naira, the country will come back to reality.
The President Muhammadu Buhari has also made his position clear that he is against naira devaluation. In his words; "i would not not join forces with those who want to kill the Naira".
Buhari has stated that devaluation of Naira would kill the currency, insisting that it was one decision he was not ready to take at the moment.
The president said he was not also ready to inflict more hardship on the poor citizens of Nigeria who have already had doses of penury.
The president said he was not also ready to inflict more hardship on the poor citizens of Nigeria who have already had doses of penury.
He had stressed that while export-driven economies could benefit from devaluation of their currencies, Naira devaluation will only result in further inflation and hardship for the poor and middle classes in Nigeria's import-dependent economy.
So to our in house economists, could yall please enlighten us on what Naira devaluation entails? Is Naira devaluation gonna kill the Naira or is it gonna help in bringing the naira back to its glory days.
So,let me ask again.......Are you for or against naira devaluation?
I am no economist but from the word 'devaluation' I am not in support.
ReplyDeleteAm not in support of the devaluation of the naira........it may lead to increased in inflationary pressures
DeleteDevaluing the naira has it's advantages and disadvantages,but I think the disadvantages out ways the advantages
Got dollar @340 and it was heart breaking
I don't think we should devalue. Devaluation works where people obey the law.
DeleteIn Nigeria fuel price will go up, motorists will increase fare. When the price come down, they will not agree to reduce the price anymore, the fare remains like that. So even if the govt had removed subsidy to make lives easier for people, only people with private cars will benefit, commercial drivers will never reduce the price of transportation and no one does anything about that. Majority of Nigerians use these commercial vehicles and they are not getting the benefit of the subsidy.
So, how can devaluation work in Nigeria. We are too corrupt to apply sane principles.
Soho is a Foolish man, because he still gets his dollars directly from CBN, he does not know that market forces have already devalued the Naira just bcos it is not official declared. Even our Banks have joined black market rate. I recently bought dollars through my GTbank for Forex trading and when they debited me in Naira, the exchange rate was 300 as against the CBN official rate of 197 but funny thing was that when I made profit from my trading and returned the dollars and its profit back to my account, I was credited with the CBN official rate.
DeleteHighest level of corruption and yet this mad man is telling me rubbish
I need to sit down quietly and read all the meaningful comments
ReplyDelete*Larry was here*
Let d in house analyst explain to me first b4 I make my choice becos I don't trust all dis greedy and selfish politicians called Nigerian leaders.
ReplyDeleteCountries that export like china, japan etc, they benefit frm devaluation as it makes it easier for other countries to buy their products but if u do that in 9ja as an importin country, u wont even be able to import cos your money will buy little or nothing, thats the easiest explanation
DeleteHow will my answer affect the devaluation meanwhile, those at the top are literally doing nothing about it? #I'mANigerianI'mNotACriminal.
ReplyDeleteThe naira is already devalued. The only thing the government should do now is to give a fix exchange rate for foreign currencies.
ReplyDeleteOne of the advantage of devaluing a country's currency is that it helps in exportation but since Nigeria is not massively into export of anything for now my own advice is for the government to withdraw the licence of BDC and increase the forex trading.
Let me stop here I'm not an economist but I don't support naira devaluation.
After the explanation of naira devaluation, then I will know which to support. But it's as bad as it can get with our economy and the naira brouhaha
ReplyDelete*grabs chair* I wan learn
ReplyDeleteBvs pls how can I get sdk app working on bbq10? This ones I found on the advert section are for iPhone and window phone .thanks
ReplyDeleteI'm against it abeg... this Buhari sef
ReplyDeleteThis is a very tough situation.... what do I know
ReplyDeletePls Buhari the poor masses re suffering,is better they devalue the naira,cos Nigerians are not ready to produce any standard goodsthe Gino tomatoes i bout 3k is as dark as charcoal,fake things everywhere..pls Buhari devalue naira so dat i can start selling my human hair..
ReplyDeleteHow can you buy tin tomatoes when a basket of fresh tomatoes goes as low as 4k?...
DeleteMadam ask her oOooo. And where does tin tomatoes get red like mac lipstick?
DeleteFresh tomatoes wen get taste, ,, someone is going to buy embalmed tomatoes and come here to complain.
Against. We Nigerians have suffered enough. What is the current government doing to strengthen the economy and diversity into agriculture and extractive industries? I am especially agains the alarming policy of school fees abroad being sourced from the black market. This is insane, no nation stops is citizens from acquiring education, where ever this education can be found. Stop importation of anything not considered necessary, do whatever it takes to strengthen the naira BUT do not allow school fees to be bought at parallel market rates. These students are the future. They will go to other countries, see how things are being done differently, see how to make this work and bring it back to Nigeria. Schooling abroad should be for anyone who can afford it, not just for the mega rich.
ReplyDeleteI couldn't agree more. Its preposterous really. If our schools were up to par,then we can argue why go to Sokoto what you can find in your sokoto. Even if that were the case, international exposure is never a bad idea for any growing society.
DeleteI know BuBu has a plan o but right now everything just looks like there's no direction. We're in for one hella ride!
Look my friend! It is either you say no to importation of everything, you can't tell me not to buy my foreign goods and allow someone to school abroad or go for medicals abroad. You can't force me to eat naija food and encourage someone to go and do a programme abroad.
DeleteI might not have interest inschool,,,my interest is my business and both of them involve patronising foreign countries. It makes absolutely no sense. I support the govt 100percent, what if the money they send as school fees is actually not for school fees? Nigerians are very crooked.
If you decide to study abroad,,,good and fine. Not on our head, go and buy black market. Afterall, you get money. Poor people also wants to study abroad but they can't handle the finances so let the ones that cannot afford the fees at black market join the league of poor people at home.
The needs of many outweighs the need of one. You cannot compromise the country because of the elites studying abroad. The least they can do is spend more money,,,afterall they are enjoying the developed economy so let them pay for it.
We cannot take a decision affecting millions of people suffering in Nigeria based on the few rich people who are studying or in hospital abroad. Total crap.
i dont even understand this Naira devaluation, someone should explain it to us
ReplyDeleteEnd time discussion
ReplyDeleteNaira devaluation can't help d economy in any way.as long as we r import dependent.devaluing d naira can neva b d way forward.
ReplyDeleteIf only I know what naira devaluation means and what it entails.
ReplyDeleteGo back to yesterday's Post on Finance Minister Adeosun on $b loan from China that woman XP explained it for you.
DeleteXP explained it in a uni-directional pattern focusing only on the proceeds from oil, shows that the person who explained it to XP gave just one example which she grasped and came here to paste. Read Nwa Amaka's explanation. Makes more sense, besides XP tried to shade Eka joy bg explaining in broken english.
DeleteXP explained it in a uni-directional pattern focusing only on the proceeds from oil, shows that the person who explained it to XP gave just one example which she grasped and came here to paste. Read Nwa Amaka's explanation. Makes more sense, besides XP tried to shade Eka joy bg explaining in broken english.
DeleteThis one is confusing Biko..economist break it down to us some...thanks
ReplyDeleteThe two problems are corruption in governance and corruption in financial institutions, if the politicians can be able to stop stealing ,channel most of the resources to real sectors like farming and manufacturing ,support SME's , promote made in Nigeria goods,and if Banks can stop using parallel market as bench mark in determining the exchange rate to sale to their customers, instead of official rate from CBN.
ReplyDeleteIf these two are taken care of Naira will definitely be stabilise.
But I heard the CBN has stoped giving banks dollars, they are to source for their dollars themselves...I think that is the reason they are giving dollar out at aboki rates.
DeleteDevaluation" means official lowering of the value of a country's currency with respect to a foreign reference currency. e.g if CBN officially make naira to usd to be N400 to 1usd,it implies we have devalued our currency. D main reason is cos of reduction in FCY earnings of d country due to drop in d international price of commodity.
ReplyDeleteDevaluation has it merit n demerit.
Merits it encourages exportation,it helps correct balance of payment deficit,it can stimuilate d economy cos it will lead to more naira for a dollar,but cons are much,increased inflation,interst rate increases,it reduces value of foreign direct investment. Etc.
D main crux is nigeria is a complex economy in times of fx instability like dis,devaluation wld av wrked well,bt d reality is dt it does not work for nigeria bcos we r stl import dependent,d rich in d economy stl linger for foreign goods and are able to get it at any rate. Fx is a function of demand n supply for ur currency,if you dont produce any tin internally as a country der wont b demand for ur currency abroad.
D reality is dt d real value of a currency is determined by wat such currency can buy.
It is only naira dt is skyrocketing to a dollar cos some pple are making smart moni frm d situation.
If govt fails to devalue we will all b force to look inward n minimize our taste for foreign goods.
D discussion will linger on bt let me stop here.paultuyi@gmail.com
God Bless Nigeria.
Thanks so much for this, so your submission now support devaluation of naira, right?
Delete*Larry was here*
Devaluation will work when we have products to export. We practically import everything so even that devaluation will kill us. We will end up with massive inflation. Prices of goods and services will increase.
DeleteFG shld diversify the econ and put a stiffer policy on importation thereby promoting made in nigeria goods and also patronise it. We have Innoson motors, cables, lubricants, etc. I disagree with frances okeke, we have quality made in nigeria goods. He hasn't done anything on Agric but busy chasing shadows. He shld forget abt his ego n get some good guys frm GEJ's admin like Mr. Adesina, Mrs Okonjo, Mr. Aganga, etc to help this regime.
ReplyDeleteThis naira brouhaha is getting messier and he keeps touring with the little one remaining. Devaluation can wait for now if only he'd listen.
#offToMarket to check prices of pampers, baby milk, crayfish, ede, azu ikpo...biko
Do you mean Okonjo iweala? Please don't mention that. GEJ administration and all the atilogwu they danced with our oil boom proceeds is what we are facing the rebound effects now. We are suffering from their carelessness. Okonjo iweala was the one championing devaluation. I don't understand why you are saying if only he would listen,,,these people you mentioned are the ones now saying the president should devaluate.
DeleteIt looks like you don't know what this whole devaluation and Buharis stand in it is all about.
The federal government want us to stop importing in order to make naira valuable! In a country where there's no stable electricity,how then are we going to produce anything... beside them should stop buying fuel and build refineries..At the these time we don't need naira devaluation because the economy is bad
ReplyDeleteWestern union's exchange rate yesterday was N196 to 1 dollar. Instead of about N300 to I dollar.
ReplyDeleteThey said that N196 was the official exchange rate amount of my country.
I am hereby highly pained because my people cannot collect dollars from banks no more and exchange it themselves.
This is economical robbery and a fraudulent bullshit law!
Yes! I am pained.
a.k.a EDWIN CHINEDU AZUBUKO said...
ReplyDelete.
Ooky....
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***CURRENTLY IN JUPITER***
Totally in support. The rich will feel it more though, cos trips abroad would be really high;and importation of goods would be really expensive. The upsides? Well, home made goods will appreciate and be in high demand, and things might begin to work in terms of infrastructure.
ReplyDeleteLet me read comments to learn.
ReplyDeleteToo many things going on in that country ,killing the same masses that voted you in slowly ,traders cannot travel to china and buy goods in peace ,when they can not get hold of dollars ,why wont prizes of commodities increase ,the end sufferers are still the poor masses ,i weep for my country Nigeria .
ReplyDeleteThanks @Star Larry, I am not in support of devaluation for now,bt technically the open market rate portends a devalued rate. Govt shld be stiff on d rate and ensure usd are sourced only for permitted items. It will b tough,bt I knw we can cope as a country. @paultuyi
ReplyDeleteWhat do you think happened when naira suddenly jumped from 136 naira to 200 naira against US dollars at official market ,that was devaluation ,though FG experimented with it secretly ,but the truth is that FG has already devalued the naira,but it didn't work out,because of so many issues like
ReplyDelete.1, over dependant on imported goods . 2,low price of crude oil which is the nation's highest foreign currency earner .3,corruption in the financial institutions. 4, excess demand for dollars and inability of our depleted foreign reserve to satisfy the demand.
When Buhari said he won't be party in murdering Nigeria currency he is 100% right ,cause the more you devalue the naira without making the dollars available to satisfy citizen's demand ,the more people are willing to buy from parallel market at any given price because of it's scarcity , the corrupt financial institutions with the help of BDC operators keep using CBN rate to set their own dubious rate ,instead of Banks to sell at official rate to their customers ,they tactically force their customers to pay extra.
The only solution is to flood the market with dollars ,this can be achieved by diversifying,exporting more than we import,we have agricultural goods to export ,we have raw materials and natural resources apart from oil to export ,but in the absent of basic amenities like power and roads, SME's can't thrive .And in every economy SME's are the only sure way of increasing gross domestic products .Buhari knows very well that more devaluation of naira can't work without first finding a way of satisfying or cutting the yearnings of the masses for dollars ,if you devalue without providing the solution your murdering the Naira.
Thank you! Very sensible comment. That is why Buhari has refused to do that. You cannot devalue the Naira in a country where we even import toothpick. Devaluation is not for a country like Nigeria.
DeleteEvery economy is different,,,all those people in America and uk speculating nonsense don't know jack about Nigeria they want everything to favour them.
Given the weakness of our economy, the naira is already devaluing itself quietly.
ReplyDelete@Mama Ijebu,no they still give Banks dollars ,but because CBN doesn't have enough ,it takes time to go round,causing queue.They need more dollars to meet up with the daily demand for it .
ReplyDeleteWe cannot devalue the naira just yet because we are still an import - dependent nation. Until we start exporting made in Nigeria products,devaluation will only kill the naira further. But first,the govt has to put different amenities in place in order for manufacturing and exportation to be possible.
ReplyDelete*My two naira*
I actually think this is a good thing for Nigerian economy. Its benefit in Nigeria's case surpass its demerits.
ReplyDeleteFirst of all, look at all the people in support of devaluation--they are puppets to the economic hitmen. Nigeria has no manufacturing base which is the only viable argument for devaluation because it supports export. We are consuming country.
ReplyDeleteThe solution is to get rid of the problem. Close all the BDCs. CBN sells to the banks at the official rates and let the banks sell directly to the consumers at a predetermined and regulated spread. Or better, make BDC an offshoot of CBN. The fall in naira can only be curbed by regulation and the regulation strictly implemented.
Scarcity of dollars? BS. CBN should contact US Federal Reserves and pay $1bn and have a private jet fly it into Nigeria in 48 hrs. Bingo! Excess liquidity. Instead of all the hoarding currently going on. The main issue is that people are making billions of naira daily from roundtripping. It takes a serious government to shut down the cabal. Oil business is no more end vogue so the canals make 50% profit for doing virtually nothing. E.g. buy $1m at 196. Sell same at 315. N196m turns to N315m. That is a profit of N219m in a few days without lifting a finger. Calculate using $10m (yes, they have it) bc this is the biggest opportunity of a lifetime. That will Be N2.19billion profit in a few days. Then repeat the transaction about 4x in a month.
ReplyDelete