 Welcome back. Now to talk about the Naira as we already advertised the Nigerian currency has weakened to new lows of between 700 and 710 Naira to the dollar. The parallel market as the US dollar demand pressure from retail and end users persists. The Naira closed last week at 630 to the dollar and has stayed within the 620 to the dollar ban for weeks before the current low of between 700 and 710 to the dollar. Now findings this is on the black market finding showed that although many black market dealers are asking for between 700 and 710 Naira to the dollar, actual transactions have stayed within the 700 Naira to the dollar ban. Now the Bureau of the Change or Forex Bureau operators have cited the lack of effects that's foreign exchange and the surge in demand for the recent uncontrolled uptrend recorded in the market, the foreign exchange market. In the same vein some bank users who have effects in their domiciliary account have told us that they have not been able to withdraw their funds from the bank due to tightened liquidity. They have not been able to withdraw their funds from the bank due to tightened liquidity. In the same vein the exchange rate of the official market has also witnessed a downward trend in recent times depreciating to 430 Naira to the dollar despite recording an average rate of 416 Naira to the dollar in the previous year. This is following more tightened liquidity in the investors and exporters window which is what where the Nigerian authorities perched their exchange dispensation at some time ago. Now to help us unpack this we're joined by two very very erudite guests. Professor Kenifer is a development economist and the lead consultant with ECOWAS and Mr Dominic Rume Uriere is a certified Metabes expert. He joins us from Delta State while Professor Kenifer joins us from Abuja. Gentlemen you're welcome to the breakfast thanks for joining us. Thank you very much. Let's start with you. What are your thoughts on the macroeconomic policies of the central bank of Nigeria? Of course we've heard from some FX dealers and those who are also customers in this report that there have been some demand pressure rather on the Naira because of the high and increased demand. We've had policies you know for instance moving the exchange rate dispensation from where it was before to the importers and exporters window that happened either last year or the year before that and several other policies by the central bank of Nigeria led by Gordon Mayfield. What are your thoughts do you think he's gotten wrong and that's where we are today? No not at all. The central bank is doing the best that it could under the current circumstances. Let me explain that the current pressure this in the last few days are actually coming from United States that have revalued their dollar. The dollar has gone up in value by about 12 and half percent and that you know just imagine dollar and euro are just a parity right now. It used to be 20 percent in differential and also powers are coming so it's almost every currency that has to be dollar or denoted in dollar or it's all affected. Now added to that is the very high speculation in our economy and then you see when you have speculation in your economy the speculation is to the extent that they want to think that the Naira is going to be different. So what we have is borrow money, get what in every month and a half purchase dollar. So can you imagine if you expect that by the end of next month the Naira will drop to about 800 to one dollar. So they will just buy the dollar that I hold it. End of next month they will sell and they will make 15 percent to 20 percent just by doing nothing. So that pressure is there. Thirdly this is summer. People are practically looking for money to travel abroad for all kinds of things for medical treatment, for leisure, for holiday and then also children's school fees are coming. People are also looking for the Naira for settling the school fees of their children abroad and you know we have them in hundreds of thousands abroad and then you have the politicians that are looking for that to settle their political stuff and that is we already know that. That's been playing out in the last six months. Then we also have the demand, the spurious demand for dollar to import from China and all other places and look at the dream balance between Nigerians. It's over two trillion. That is alarming, that people are importing all frivolous items because that is the only way they can make money on the current circumstances in their view. So they bring everything they can and then they pass through, inflation pass through to the consumers and you're going to have to find a way of taping these appetites. She even tried by delisting 41 items but it didn't ban the import of these items. They just said that I haven't got the foreign exchange to give you but these guys are still active in the market sourcing money and there's also dollarization of how I can. If there are some places who go and see prices, who pay the dollar and when you ask them they say well this is the only way I can sell it so that I can find the thing because I'm not sure about the fund next month. So you have all these cumulative effects. Now let me put it that way. There are four x pricing mechanism, four x interest rate, monetary policy rate, inflation. There are all prices and when you come to price, you demand a supply for the item placed because you try to find where you resolve demand and supply. Where are they likely to meet? In the case of $90 and Naira, we don't have any point right now. What it is is that about 80 percent of our foreign exchange to come from crude oil sales and CBN has been waiting for this money last year. About three billion dollars would have been going from NNPC to CBN every month. They haven't seen it. Not last year, this year. They haven't seen it and that's why you saw the JP Morgan clamping down on nitrogen and all of that. So what it is done is that NNPC is doing a direct crude swap with refiners abroad, sending them the crude and then receiving the PMS in return and then when they do their arithmetic, they say, oh wait a minute, that the price of the ribbon, what the potential revenue from the export of the crude is outweighed, far outweighed by the cost of transportation refining and bringing it back to Nigeria to a government where your exclusive agent go and find a balance and they call that balance under the cover. And that balance is now 500 billion naira every month. That is what you are calling subsidy. They are now telling government to go and borrow four to five billion naira to subsidize the price of the PMS. That is where we are. And now you can now look at the impact of that on debt borrow on the debt and debt financing and then the government's removing the possibility for government to spend money on the capital projects and then deflation. So that is the question. Now so what happens in reality is that CBN is acting a 20% room that it has to get more forex from remittance which is dropped from about 26 billion to 100 million a week, which is about five or something billion a year. It dropped. Foreign direct investment is not there. It's only about 200 million. We used to be about 8 to 10 billion. Foreign portfolio investment is not there, but all heading back to America where interest rates is going up and all that. So it's very, very tough. CBN doesn't print dollar. It's very, very tough out there. But let me tell you something. 93% of forex demand and supply is actually the translation is going on in the official window. 93%. It's only 7% that is going on in the black market where all this whole noise and all this power is coming from. Only 7% of the forex. So that's the story. Interesting. One may be worried that the market that gets the, to get the, to hug the headlines and grab the headlines almost every day, you know, in the newspapers is the parallel market, not the official rate. One wonders why that is. But I'll come over to you, Mr. Uri Rie. What are your thoughts on the policies of the Central Bank of Nigeria? Monetary policies bring in mind that I think in September 2021, the Central Bank of Nigeria accused Abuki FX, Webster that collates black market exchange rates of the Nigerian Naira against major international currencies of carrying out illegal activities undermining the Nigerian economy, in particular, you know, bringing the Naira under pressure. Well, Abuki FX saying sister shut down its Naira, you know, updates and the Naira has also gone down with Abuki FX. Well, thank you very much. It is sad that we not yet realize that currency is the lifeblood of every economy and that the power of a strong and stable currency cannot be over-emphasized because when you look at this particular statement that you just said now that the, it is because of a website. You can imagine a CBN governor that has a lot of certifications from some UK university and saying is because of the website that displays a Naira to dollar rate that is costing some of this particular nose dive in the value of Naira. And that is a very, very, very big question to start looking into because when you look at things, you look at like in the past three years Nigeria printed about one trillion Naira and they were able to use, they shared about 100,000 to people during COVID and then send some offshore and then took the currency to about 18% in inflation. But that's not what we should even first of all focus on because if you look at some countries like say South Korea, today the Naira is officially pegged in the bank at $411 to $111. If you look at like South Korea, they have their currency pegged at $1,177 to a dollar. But does that mean that Nigeria having a lower value is our economy better than that of South Korea? No. I mean, South Korea has like three times bigger economy than what we have. Today, we have the Naira being pegged at about $710 to a dollar, but that is not the end of it. We can start looking at things that cost this particular inflation in the first place, which number one, we have that particular money printing that I've just said. Then we have some kind of, then we have debt currently that we have. Okay, so Nigeria currently is running like a debt financing structure, not a capital type of financing structure and have I mean, Nigeria borrows debt to be able to finance what it needs. It's not generating enough revenue that is able to settle its debt. Like what Prof said, for example, when he was talking about the petroleum industry, on a yearly basis, we saw Nigeria bringing in products of up to $6 billion, because that also coincided with the CBN's reports over the last five years that were virtually imported about $36 billion worth of PMS products into this particular country. And you see that we can then go to come to the rescue because this particular $36 billion have this hard currency supply that has gone out. But that particular revenue is not out yet. So that particular hard currency supply that is going out on a constant basis, being able to service the petroleum sector will not yet be solved because we don't still have a way to fix that particular refining problem here. So you see that just coming out to say one website actually dropped that particular value is a very, very, very wrong move in the first place. Then we see KLS statement coming from the CBN governors until like what he said a few weeks ago that if you exchange your NERA for dollar, they would arrest you. I mean, if you know that if you sell dollar because of NERA, why would you now want to bring out your dollar to sell it so that they will arrest you? I mean, you start holding your dollar to ensure that what you don't get caught. And that actually now causes a demand on the supply problem, which Prof actually said earlier. And you see, because of this particular thing, it causes us to have something like an arbitrage. And how do I mean by arbitrage? You see the official dollar rate in the CBN is about 411. You see the black market price coming at about 700. Some people, they have access to gain this particular dollar or get access to the treasury and they get this particular dollar at 411. And then they go back to the black market use ATM or maybe in another country to withdraw it. And they trade it at a higher price, which is actually destroying the structure of the NERA to dollar economy. Then we see something like abused by the allies, just like a professor. Some people, they want to just hold their money in dollar and start dollar rising their economy, why they're in Nigeria. You can see that if they printed about one trillion NERA for that particular COVID time, where did that particular money go into? Maybe some of them went to buy dollar again, thereby ensuring that the demand for dollar continues to go high. And then not as if we're diversifying the economy so that we're not saying, okay, we're using other sectors of the economy to be able to produce more things that can be exported. And it's not as if foreign direct investment is also coming into Nigeria, because from the statistics we got, foreign direct investment has actually been on its low in the last six years. We have not had, because of the insecurity problem, because of the epileptic power, nothing is actually coming into this particular system to ensure that we are making that particular lookup produce that we can be exporting that can increase our supply in terms of effects revenue. And then you see something like a border closure that happened. You can see that that particular border closure enables us to start producing rice locally and stop the way we were spending dollars in terms of exporting rice, which actually now increase some of the internal supply for that particular dollars for us. But we need to ensure that these particular things are sorted out, else we cannot rely on just one civilian government telling us that there will be one particular website when there are major internal problems. All right, because of time, my brother, let's quickly, because of time, let's quickly cut it short. And just a quick one from you, Prof, do you think that the current exchange rate direction of the central bank, or let's say the monetary policy committee, last month they moved it from 13% to 14%, do you think that they're getting it right with these tweaks, the way they're going about it, with the monetary policy rate or the exchange rate? Very shortly, please, sir. No, do not, it's not an option. The increasing it is in line with this international practice right now, and it's the right thing to do for them. The TBN is focusing on generating more foreign oil revenue with the ROT $200 billion revenue drive, which over the next three years could solve this kind of problem, and people will start looking for the dollar in the way we're looking for it. So there is a demand side and a supply side action from the authority. But it seems from fair that everybody thinks that CBA should solve every problem in the economy, and we are glad that it's doing the best that it could, but there are also fiscal aspects that could also augment. If you raise the, if you use instruments, what you call levy instrument to increase the effect on those that want items, or even extend them, to bring more pressure on those who are important, to pay more tax. Okay, all right. And also, please demand. All right, Prof, we have to go. Interesting. Gentlemen, thank you very much for your time. Dominic Rume-Riri, thank you so much for your time. And of course, Professor Kenneth Fearswell, we're grateful to have you gentlemen with your analysis, and I hope to have you soon. Thank you, gentlemen. Thank you very much. All right, that's, thank you, thank you. That's the size of our package. This morning on the breakfast, we return tomorrow with more analysis and interesting discussions. 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