OluwatoyinAmao samples the views of Nigerians on the impact of devaluation of the Naira on the economy.
It would allow qualified banks to have sufficient liquidity, capital base and assets to independently source for foreign exchange.Though with the introduction of the new policy, more avenues to buy and transact with other currencies will be more feasible and this will reduce the pressure of the dollar against the naira.
Yes I think so. Currently there is high demand for dollar since our economy is heavily dependent on imports. The value of our currency is tied to the international price of crude oil. These two factors interplay to severely reduce the value of our currency. If the CBN continues to peg our currency against the dollar, it will cost us scarce foreign reserves, which the CBN is desperately trying to conserve so as not to be depleted.
The new policy which is basically the floating of the naira against the dollar, allows the value of the naira to be set by the laws of demand and supply and I feel it is good because it will help us conserve our scarce foreign reserve; boost our local economy and it would discourage the importation of things that could be produced in Nigeria. Hence in the long run, if we are successful in diversifying our economy, this policy will be beneficial.
Yes it will. Since the announcement of the ‘unofficial’ devaluation – I said unofficial because the president still insists he won’t devalue the naira and naira has lost over 40% – the market has been thrown open, no scared cows with respect to some set of individuals having access to the official exchange rate while everyone else trade in the parallel market and from elementary economics, we were made to believe that the higher the supply, the lower the price.
It will definitely be hard at the beginning with our naira ranging from 280 to 350 against the dollar but at the long run, those who have hidden millions of dollars will not be too comfortable keeping the dollars in their accounts for fear of losing value and definitely the market might be flooded again and very soon we will have more dollars than we need which will in turn force the price a bit down and stabilize our forex but on the economic downturn, it takes far more than a stable forex for an average man on the street to have three square meals per day.
I think it is just a reaction by the CBN to forestall the looming recession. This government is thinking long term and truth be told, in the long run we will run at a loss. CBN’s father Christmas days of defending the naira and pegging the naira at 197 at the interbank are over. CBN’s logic is that subjecting forex to the forces of demand and supply will help cut off arbitrage and take out black marketers.
I think the economic downturn will subside in the coming months, given that the government is now beginning to adopt expansionary macro-economic policies of increasing money supply and increasing government spending because we cannot save our way out of a recession.
Hopefully, it might impact positively to our economy. In my own opinion, the policy decisions will impact the economy on several fronts. I am sure with this new implementation scheme, inflationary pressures will continue non-stop but there will likely be foreign exchange inflows from domiciliary accounts estimated at USD20billion as currency exchange risk minimises and the capital market activities are expected to witness gradual recovery as foreign exchange risk diminishes, with the adoption of a more flexible exchange rate regime.
The CBN announced a flexible exchange rate regime aimed at making foreign currencies more accessible.
Yes I believe. My reason is because the policy of the CBN to peg the naira at 197 was not doing the economy any favours, it created an overwhelming demand for dollar from public and private individuals which could never have been met save for this new policy. For instance, if you are an importer and you need $10,000 to purchase goods, you would have needed to wait several months on the queue for dollars to be gotten from CBN at 197 and waiting several months does not assure you of getting it, if you can’t wait and you buy dollars at 350 from black market definitely the price of your products will surely rise.
The former policy also constituted inequality in the market because what if you could not wait to get dollar at 197 and I waited and got it, I could afford to sell at a lower price and still make twice my profit. Definitely, you will not want to sell even near this rate without making a loss. Also, in addition to this, ATM rate for users abroad has dropped. With the former regime, if you check the rate of naira online, you would see 197 but when you use your ATM, you are billed 330-360.Now there is a small margin of difference in the rate you see online and what you are billed from ATM, with this policy, people plan and manage their expenses.
I am being skeptical about it but if strictly adhered to, it will make a positive impact. It will reduce the instances of our so called leaders, after stealing our money to move them abroad to set up businesses there, whereby promoting that economy while our own economy suffers. The government is making efforts to upturn our economy into a capitalist country and want to reduce our dependence on other countries for finished goods.
In my opinion, the new policy is aimed at stimulating foreign investment. It is an indirect way to devaluing the naira so the investors will bring in investmentbecause the little dollar they bring in, will give them much naira because they believe it is the foreign economy that stimulates the investment by creating industries and giving employment among other things. Also the stock market will be developed by the foreigners investing in stocks. However, these are the theoretical aspect of it. The Nigeria factor is still there which has been the reason why the policy of the government has not been yielding fruitful results.
Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.