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Nigeria has an FX problem.
I think that's obvious
I think what's more intriguing is how CBN wants to magically solve the problem through ' endpoint gymnastics.' (Don't bother, I formulated it)
I believe CBN is trying to protect its exposure to FX drain.
My bigger question is.
Why is the problem(FX) getting crazier?
(most of the policies by the CBN this year has something to do with FX)
The simple logic in my head without dabbling into every other intricate part of our economy is that
Our oil now sells for more than it sold for in 2017/2018
Since oil forms a significant chunk of our revenue.
We typically should be earning more FX
But for some reasons, we are earning less
Topic starter
Posted : 24/08/2021 6:27 am
Nigeria has an FX problem.
I think that's obvious
I think what's more intriguing is how CBN wants to magically solve the problem through ' endpoint gymnastics.' (Don't bother, I formulated it)I believe CBN is trying to protect its exposure to FX drain.
My bigger question is.Why is the problem(FX) getting crazier?
(most of the policies by the CBN this year has something to do with FX)
The simple logic in my head without dabbling into every other intricate part of our economy is that
Our oil now sells for more than it sold for in 2017/2018
Since oil forms a significant chunk of our revenue.
We typically should be earning more FX
But for some reasons, we are earning less
Nigeria's foreign exchange reserve has declined exponentially since 2018.
This is a pointer to the fact that our FX earnings have taken a bad hit.
Topic starter
Posted : 24/08/2021 6:31 am
The declining reserve at a time when oil prices are rising, raises a question on s the tidiness of the national economy management.
But a former Deputy Director of the Central Bank, Stan Ukeje, explained:
"The rise in price in the spot market for oil does not affect Nigeria's oil revenue because the country sells on contract. A rise in price in the futures market will materialise only in the future after delivery. Also, not all oil cargoes have off-takers. Only international oil companies (IOCs) have steady market access because they are linked with oil refineries, petrochemical plants and strategic storage facilities. Politically connected firms which are awarded oil lifting contracts by the Nigerian National Petroleum Corporation (NNPC) have neither vessels nor market access."
Topic starter
Posted : 24/08/2021 6:33 am
