The Central Bank of Nigeria (CBN) has finally let go of pegs on the naira, allowing the market forces to determine the true value of the local currency against other currencies across the world.
This was disclosed by Godwin Emefiele, governor of the bank, who spoke at a press conference in Abuja on Wednesday.
Emefiele said the bank will operate a single trading window, which will take off on June 20, 2016, adding that the CBN will only step in from time to time regulate the market.
Emefiele said the bank will appoint less than a dozen primary dealers who would now be in charge of foreign exchange trading, driving flexibility in the system.
The governor added that the 41 banned items remain banned, and cannot access forex from the new window.
The cable
Buhari is so clueless and useless as a head of state.
ReplyDeleteThe reality of this policy is this will make the turning of the naira into the Zimbabwean dollar.
Jonsing James pls keep ur ignorance to ur ilk. Zimbabwe is under western countries sanctions, Nigeria is not. Ignoramuses
DeleteCapitalism is driven by market flexibility.
ReplyDeleteKeep the ban in place to encourage local production.
Good thinking @Anonymous J, its a good development.
DeleteThe same people typing insults now were the same people insulting the government when they announced the ban.
DeleteOk
ReplyDeleteThe economist in the house should please educate me on this.
ReplyDeleteGood news...hope they stabilize the economy soon
ReplyDeleteBe like say British doctors don clear the things wey be dey block Baba ear wey no make am hear word since
ReplyDeleteGood one for the fx market, time to make some real money
This is my problem with this govt.
ReplyDeleteBan check points
Ok, check points come back
Maritime reforms
No, lets revert back
Only NNPC will be importing fuel
No problem, you can all import fuel now.
No domiciliary account
Ok, you can now have your dom account.
Petrol will go for 87 naira
No, only NNPC petrol will be 87 naira.
No, everybody, sell for 145 naira.
We will tighten the ropes on foreign currency. Our monetary policy will be tight. We will determine the value of dollars.
-Months later: Now, let the market determine it!
The question is: DO THEY THINK b4 making these policies?
Do these people think Nigeria deserves trial and error govt?
What is change if u cant make policies and stand by them?
Do you know how many businesses and sources of livelihood these policies have destroyed?
Was it all to try to paint the past admin bad. If not, why are they returning back to the previous order?
Anyone who knows and deals in forex will tell you the harm indecisiveness can bring. A day of delay can ruin you.
Nobody invests in a country where policies change everyday. Investors always need results, security and stability. This is why they arent coming in droves. Trust me, I know what I am saying. Its sad when people think we dont like this administration just because we dont like their faces. Its a lie!
Our economy today is a result of these outdated socialist policies. YOU CANT DETERMINE DEMAND, SUPPLY and PRICE at the same time! It has never worked successfully.
The worst is, when they make the policies, they tell you why its the best. What it will benefit us. Why it will stop corruption(thats all they ever say to inflame their supporters), then the supporters will come on blogs to praise the policy and disparage anyone who says contrary.
If the policies were so good, why reverse them within months? What changed?
How do we trust the new one is the best again? And how do we know it wont change again?
Now, after they change it. Their supporters will still come out and praise the change.
Is it now about ego or governance?
With you epistle, in which you made some very valid points, but you completely ignored the fact that current factors can and will affect some policies. You don't like this government and naturally you'll be against everything but I personally like the fact that there's some effort.
DeleteLong before this government came into power, the economy was already on its way down due to the fall in oil prices. Some states had not paid salaries since January 2014 and by elections, 27 out of our 36 states had not paid salaries in months with okonjo iweala talking about nigeria having to borrow to pay. Remember that's why this administration had to give out bailouts. Now add to the reduction in oil production in the ND, of course that will only compound our problems.
Honestly, if it were so easy to make economic policies and thrive then every nation will probably be a 1st world. We've been devaluing our currency for years without progress. They are obviously trying something different. This administration came with good intentions but learned that good intentions alone cannot fix the economy but painful sacrifices will have to be made.
Preach!!!
DeleteThey don't think, they don't strategize, they don't plan, they keep 'making and unmaking' decisions.
This is not a sustainable government.
Anon; 19: 57 And your epistle ended up stating my point after your tour around the bush.
Delete"This administration came with good intentions but learned that good intentions alone cannot fix the economy..."
Pardon us, if we realised this a year ago and criticised the policies and the so called good intentions. Pardon me also, if we called for proactiveness as against window dressing and 'good intentions'. Kindly pardon us if we had foresight and now are not happy that all these moves are coming an eve before doomsday, when we are being declared as heading towards depression.
Devaluation, Tightening of hold, artificial scarcity, floor and celing rates, all these things dont work without visible signs of manufacturing, industry, exportation and importation. Monetary policies work hand in hand with vibrant and non opressive fiscal policies and industrial policies. Pardon me if I say it now.
The government will still realise it in the end. Its not about 'efforts' but determinable and good policies. Before America experiments, so much economic consultation will be done. UK is even worse. The moment you shake the balance with your 'good intentions', it can plunge the country into economic depression.
The policy is a non-policy. The CBN normally had given freedom to commercial banks and currency dealers, thus led to the boom in that industry In d mid 2000s. They only used to step in as umpires. This was what It was before they assumed power but they decided to tighten and ban and all that. Now they want to revert to status quo and are dressing it to look new.
As for the forex, they will still revise it. to say why will be another epistle. Just put me on record.
And @ Anon: I dont hate the govt dear. I'm not that biased. We all speak from where it hurts us the most. I know too many people in the financial business languishing. That terrain is very dangerous now. Thanks for your opinion though.
Delete@Anon 19:56, BonParte's comment is on point no need taking a swipe at her.
DeleteI am no Economist but i have good commercial acumen. Economy was going down before being handed over by the previous administration but somehow common man could eat.
You may not be aware of what is happening in the private sector, husband and wife being retrenched by the different organisations they work for.
Again you cant control demand, supply and price, the 1st 2 determines the later.
The key issue i see in this administration is that the Economic team lead by The MoF is not "confident".
Confidence is part of the reason why Foreign Investors will at least maintain status quo and not pull out of the country, however frequent changes in policies destroy the economy.
Some organisation have just found their bearing with the former policy and some months down the line may need to change their long-term and short-term plans.
Would i deny that the aim of the previous forex policy was to supposedly encourage and protect indigenous business?, but i doubt the cost benefit analysis was thoroughly analysed.
Becoming an independent economy will require a long term plan with huge investment on infrastructure.
Tired of typing but we will just wait and see how this 'relaxation' policy works.
Hmmm, interesting from both of u, I ve learnt something today. Thank u Bonaparte NN n Anonymous. Don't i just love this blog
DeleteAmakanwa you said "Economy was going down before being handed over by the previous administration but somehow common man could eat." When you're falling down, do you just go from standing upright to just lying on the floor? No. It's a process. The economy was going down and now it's down. It's a process and now we're on the floor.
Delete@bonaParte. You said "The CBN normally had given freedom to commercial banks and currency dealers, thus led to the boom in that industry In d mid 2000s." The commercial banks and currency dealers are some of the most corrupt organisations in our country. They use their freedom for selfish reasons and only add to our problems. You CANNOT compare nigeria to UK or America because corruption is a part of our culture and we can't just ignore that or pretend that's not the case.
Anyway you've brought salient points once again and I respect you and your opinions.
Thanks Amakanwa and Anon 21:20:
DeleteI learnt a lot too
What does this mean? Can someone explain to me pls? Thanks!
ReplyDeleteWow
ReplyDeleteThis is the best decision ever .
Forces of demand and supply should be allowed to take its cause.
Wow
ReplyDeleteThis is the best decision ever .
Forces of demand and supply should be allowed to take its cause.
Hope this will strengthen the naira? The exchange rate is too high. God please intervene in Nigeria
ReplyDeleteGrt
ReplyDeletewhich one be the bank will appoint primary dealer? Hope it's not aboki? Cus the flezible thing won't work out fine as loop hole for mago mago they will be looking 4, and pls which one be 41 banned item?
ReplyDeleteSo does that mean $1=1N now?
ReplyDeleteNa WA oh.
ReplyDeleteWhat they should have done 6 months ago and we would have stabilized by now. Now we will suffer well into 2017. Unnecessary sufferhead again but Buhari thinks we should all suffer as we all deserve it. Useless government
ReplyDeleteFlexible exchange rates simply refers to when the exchange rate fluctuates due to demand and supply.
ReplyDeleteRemember that if there is high demand of a particular currency,it's exchange rate compared to others increases.
@Bona,i totally read your comment and I feel you. The trial and error is killing.
I hope by now FG have got hold of very good economists to brainstorm round the clock for better solutions.
This reminds me of my comment concerning a post(cant remember now) last year where I stated that things will get to this point,analysing what happens to a country rift with terrorism,Unstable policies,agitation for the creation of another country.....foreign Investors definitely won't feel safe.
I love my country,i need my country to bounce back..better and stronger.
God Bless Nigeria.
I pray too. And God bless Nigeria and lead the govt right. People are suffering.
DeleteI feel you too
Someone pls explain in lay man's language
ReplyDeleteBona,
ReplyDeleteOil dey your head. Yur are absolutely correct. I am no economist but this is my understanding of the Buhari govt's roundabout game.
In matters of economy especially a country trying to attract Foreign Direct Investment, inconsistency in government is disaster. No one wants to put his money in a country where today policies favor you and tomorrow they don't. Why the complete regulation for the last 1 year? what did they achieve except the Naira loosing 50% of its value against the dollar. From NGN180 to NGN350.
In a bid to stop the GEJ govt eroding our external reserves in an attempt to keep the Naira at an artificial value of NGN180 which was killing the country they brought a worse policy. This should have been done a year ago and by now, the Naira would have found its place at about NGN250 as experts predicted but 1 year delay has lost the currency half its value.
Anyways, for those who asked, it implies that the value of the Naira wont be set by the CBN but by availability and the demand for it within Naija. So in essence its going to be a permanent black market kinda just that banks and every other agency can sell at the fluctuating rates which will more or less stabilize the price with minor fluctuations. The first few months might be rough but I personally dont see it getting any worse than it already is since we all buy at black market value which the CBN has no control over anyway.
Its a move that came 1 year late and for God's sake, Nigerian administrations should stop their inconsistency, its murdering the economy and fast.