Naira: Sanusi Right. He is Also Wrong

We wrote in an article about the inevitability of a fail in the value of the Naira (See : CBN's Bind: The Hunter is Laughing)

Last week, the former governor of the Nigeria Central Bank, Sanusi Lamido Sanusi said Nigeria should devalue the Naira.

When we say he Is right ,we mean that the hunter is still laughing.
Namely, that the fall will not be at anyone's say so. Rather it will be an internal imperative.

Take a look at these:

Defending the Nigeria via the CBN's various interventions have brought down Nigeria's External Reserves to a mere $30 billion. The lowest since 2005.
Image result for sanusi lamido
Nobody is bringing back the money they ( investors) were able to take out after president Buhari has shown that he has neither the Inclination nor the grasp of how markets work.

Curdling access to dollar briefly stabilised the reserves. But with the near inability to sell Nigeria's oil, the reserve will dry up.

Already,what the trend had done in August,was to force importers to pay higher for dollars via other means with a view to passing the pains to buyers. It would have meant an inflation.

Instead,they are saddled with products people don't need. And businesses are bleeding.

According to Reuters, "ultimately,devaluation will become a fiscal necessity than an external necessity"

Nigeria's current account deficit could be up to $10 billion this year.

Ship owners now charge more( in dollars) to carry Nigeria crude to India
.They have been asked to sign" letters of comfort"

This says that ships  carrying Nigerian crude cannot be used for any illegal activity. So shippers who are averse to risks avoid Nigeria Waters."

And this: "it will take a combination of a weaker Naira and a higher Interest rates to get us back to Nigeria." Said Johann Van Dick, a Dutch fund manager
When this happens( and it will) local businesses will die.

Sanusi Wrong:

Removing a subsidy that the people have never enjoyed is not Nigeria's problem.

We mean that ,in real terms,there has never been a subsidy.

And what happens when the reserves goes home?
Nigeria will now accept any remedy.

The hunter is laughing.
Share on Google Plus

About ossy ilumah

This is a short description in the author block about the author. You edit it by entering text in the "Biographical Info" field in the user admin panel.