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A Guide To Understanding 5 Economic Jargons In The Speech by Hamachi(f): 4:22pm On May 30, 2023 |
Presidential Speech by Bola Ahmed Tinubu (BAT) - A guide to understanding 5 economic jargons in the speech: 4 Likes |
Re: A Guide To Understanding 5 Economic Jargons In The Speech by Rexymania(m): 5:07pm On May 30, 2023 |
Nice one 🙂 1 Like |
Re: A Guide To Understanding 5 Economic Jargons In The Speech by lavylilly: 5:58pm On May 30, 2023 |
Assuming no unified exchange rate and subsidy is removed, we will be seeing the price of PMS at N400 to N500 per litre based on some analysis, BUT if there is no subsidy and the exchange rate is unified I can imagine PMS trading at N600 to N700 or beyond. Understand some key points: 1. Unified exchange is not going to reduce the dollar rate but will shoot it up to merge the forces of demand and supply. 2. Dangote refinery is going to play minimal role because whatever they do, it has to be reference to a dollar rate in question. If the rate in force is official rate or otherwise, the dangote refinery will act accordingly. Remember, it's a business venture. 3. Unifying the exchange rate will further take the dollar rate to more than N700 because people like me and you will be demanding for the Dollar too much while only a few individuals are exporting or earning through the dollar. High demand of dollar weakens the naira. If such happens, then our dollar rate will be something around N600 to N700 based on the DD & SS. Our official rate is something that the cbn has 'pegged', and it does not reflect the actual market rate. Unifying the exchange rate is akin to saying floating the naira, i.e., market forces to determine the exchange rate always not to fixed it as how cbn is doing now. Anything short of that, there won't be a unifying rate because however you do it, people can artificially create a black market for such transactions. Benefit of unifying the exchange rate: 1. Massive corruption will reduce because nobody will cut corners to get a dollar rate at different prices. 2. Round tripping will be eliminated. (Purchasing at official and selling at black market rate) 3. Availability of the dollar. The dollar will be available to anybody who wants it as long as you can afford the market rate And a whole lot of other benefits that it brings to the monetary policy system. Problems of unifying exchange rate: 1. Availability of dollars will create massive unnecessary import. (Aliexpress soldiers are waiting) 2. Availability of dollars will create artificial scarcity, hoarding of dollars by powerful elements. 3. Increase in the price of some goods and services. Most manufacturing industries that are producing goods are getting their raw materials from imports, and hence, they obtain the dollar using the official rate, Unifying the rate will make them get the exchange rate at a price above the current one, which will, in turn, shoot the price of goods and services. Electricity bill will also go up because the current system of determining the price of Kwh of electricity is done using the official dollar rate. Some will ask me what concerns the price of electricity with dollars. Electricity is generated majorly using gas, and gas price is benchmark using the dollar. 4. It will lead to an increase in PMS price. Now, this is my major scary point. Assuming subsidy is not going to be removed, if the exchange rate is unified and dollar is trading around N600 to N700, the price of PMS/litre will go up from the current N190/litre to something above N200+. The unified exchange rate will boost our crude oil revenue and boost the price of PMS. Take note of something. An increase in crude oil price ($$) always leads to an increase in PMS price. So, imagine the scenario where subsidy is removed, and the exchange rate is unified. This economic decision will factory reset us all. |
Re: A Guide To Understanding 5 Economic Jargons In The Speech by savcy(m): 6:08pm On May 30, 2023 |
I'm particularly interested in Arbitrage. That's where most big men get their money from. I doubt he'd be able to curb it. Buhari tried and failed. In terms of monetary policy, he said the country's interest rate has to be reduced to aid businesses. A lot of Buhari-nomics going on in the MPR so a "clearing house" is needed. 1 Like |
Re: A Guide To Understanding 5 Economic Jargons In The Speech by Hamachi(f): 9:28pm On May 30, 2023 |
Rexymania: |
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