Re: USA Africa Dialogue Series - Re: Nigeria’s central bank will eliminate naira black market, says finance ministe

It is always wildly naive or the fantasy of a gulag/police state to contemplate that you can fix or determine the price of a product or an asset you don't own/produce or the price at which those who own/produce it but don't need it and those who need it but don't have it, are willing to exchange the asset/product. It really doesn't matter whether any or all of these parties are speculators.

 When the Finance Minister or the CBN Governor has found a way of creating/earning sufficient foreign currency reserves or meeting all the demand for foreign currency at their artificial official exchange rate, without seeking to criminalize a free market interaction among law abiding Nigerians, they can talk about the disparity between the official and parallel exchange rates. But then, this is your Finance Minister whose highest qualification is a PGD in Finance  and your CBN Governor that who was a banking accountant, from a bank that is not really a bank, hence no fantasy between them is particularly shocking or even surprising.

On Wed, Dec 21, 2016 at 3:30 AM, Mobolaji Aluko <alukome@gmail.com> wrote:

My People:

The Finance Minister should not be so categorical about making statements on behalf of the CBN, in a manner that does undermines the substantial independence of the CBN.  The Presidency should handle FISCAL POLICY while the CBN handles MONETARY POLICY, and while there should be COORDINATION, there should NOT be "DIRECTION" of one by the other.  This notion of INDEPENDENCE of the CBN is a given international one, even if in reality it is true or untrue to various degrees in various countries.

So there should be better guidance in that respect in terms of public pronouncements.

On another note, a N500-$1 exchange rate is pretty hefty....and crushing.  Clearly economic orthodoxy - this notion of supply and demand and laissez-faire economics - is not helping much - but we shall see.

And there you have it.

Bolaji Aluko

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https://www.jumia.com.ng/crown-natures-sport-top-blue-5562285.html?gclid=CKGc9cKIhdECFeYp0wodhx0P1w

Nigeria's central bank will eliminate naira black market, says finance minister

 Published: 20 December 2016

ABUJA Dec 20 – Nigeria's central bank will try to eliminate the currency black market, where the naira trades about 40 percent below the official rate against the dollar, Nigeria's finance minister said on Tuesday.

Africa's largest economy, dependent on oil exports, is in its first recession in 25 years as low global crude prices take their toll.

The central bank scrapped a 16-month-old peg of 197 naira to the dollar in June, but it continues to trade in the official market, so that the naira remains far stronger against the dollar there than on the parallel market. The government has blamed that black market for damaging the already shaky economy.

The central bank (CBN) "has been directed to do this and CBN has promised to do something by putting a system in place to eliminate the black market because it's damaging the economy", Finance Minister Kemi Adeosun told a conference.

A  CBN spokesman, Isaac Okorafor, said the central bank was working towards "ensuring that the forex market operates as effectively as we would envisage".

He said the aim was to "ensure there is no black market" but did not give details of how this would be achieved.

The naira has traded around 305.5 naira to the dollar on the official interbank market since August, while it was quoted at 487 to the dollar on the parallel market on Monday.

CREDIT: REUTERS

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Listserv moderated by Toyin Falola, University of Texas at Austin
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