CBN Can Make N1 Exchange For $1…Then What?

1. Let us be clear, in economics…there is no free lunch

2. Central Bank of Nigeria (CBN) can make N1 to become $1 in three months….how?

3. They fund the Interbank market with $500m daily… $1 will be N1 by June 2017

4. So why is the CBN not funding Interbank market with $500m daily?

5. Well because CBN has reserves of only $30b or so…so by my hypothetical example, that’s 60 days or maximum one quarter of funding imports

6. It is like a bachelor spending his house rent on eating $500 buffet lunch daily at the Hilton for a week….then what?

7. So when you celebrate Naira gaining strength…ask for the Foreign Reserves figure….thats what is being debited.

8. We are simply spending our reserves to make Naira strong, which brings short term joy, long term?

9. Sustainable long term success in exchange rate policy is an increase in Foreign Direct & Portfolio Investment and exports…..

10. Again to close, there is nothing wrong with a weak Naira for a nation that exports a commodity priced in US Dollars.

11. It is important we dont celebrate “strong” Naira…that kills the economy….

12. If N1 became $1, Nigeria CANNOT pay salaries

13. In 2015, according to OPEC, Nigeria earned $45.36b from crude oil sales, at N1 to $1 thats N45.36b…bill for salaries in 2015 budget was N2.6t

14. Will Nigerians accept a minimum wage of $15 an hour? if N1 exchanges for $1?

14. So the Naira should stay weak, to spur exports, because its the $ export proceeds, converted to Naira that funds the nation.

15. The long term strategy must be to substitute imports that drain foreign reserves especially PMS

16. Please note N1 to $1 is simply an analogy to project a “strong” Naira.





  1. Kalu you comment about we spending our reserve to make naira strong and dollar weak is totally and wonderfully wrong in all direction. Do you know we now make 100 million dollar daily for oil sells. Let me break it down for you. Let’s use the worse case say oil is $50 par barrel. Multiply $50 by 2 millions meaning we make $100 million. Do the maths for 1 month= $3 billion. Now CBN only sell $1.5 dollar weekly to the banks, a total of $6 million a month. It us use worse case they sell $500 million in a month. Kalu we still have $2.5 billion. So stop selling these analyses to common nigeria who don’t have the opportunity like some of us, as we speak out reserve is not depleting but increasing. Preach reality and not deceiving messages

    • Are revenues automatically translated to Profit?

      assuming we earn $3b a month…what about costs to get the $3b? The Chairman of NNPC says costs are $30 a barrel…

      Also keep in mind, Nigeria does not earn 100% of crude oil revenues but rather has a Joint Venture Agreement with the International Oil Companies… our share is 50% of the crude drilled out.


  2. The CBN is only teaching Speculators a lesson,that is what I believe.The Topic of the lesson is “Don’t Touch the USD if you have no immediate use for it”.There has been very frivolous demand for the USD,people being rich overnight without working.Let the CBN burn their fingers,make the Speculators loose money.I am sure after this loss a lot of Speculators would leave such buisness

    • Very correct Chidozie, the intervention by CBN is already causing hell in the palace of speculators, those who have been holding on to their forex are now running to the market to exchange it, that for me is one of the strongest objective of CBN, it is short term…i agree, but it needed to be done, enough of people turning rich over night through speculation. I am sure a long term plan is on the way. I agree with Kalu, Importation must be substituted, we have no choice but to look inwards, but for now, i totally agree with the CBN’s short term objective.

      • After this lesson from the CBN,I would only advice they increase access of manufacturers/SMEs/Entrepreneurs to machines for Production especially those whose raw materials,75% or above can be sourced locally.They would see importation of these finished products drop,people would get employment in factories.If the FG can afford it they can then put through a plan to establish industrial zones in the 6 geopolitical regions,build industrial complex,furnish it with transport,road & rail access,furnish it with power,living areas,water,manufacturers can rent whatever space they need,100sqm,200sqm as they need.With this manufacturers need not worry about cost of power or land,the FG earns revenue on rent and can easily monitor tax payment.

  3. You cannot but say a whole mind in a single POST. Thank you for this. How do we get the Naira stronger if not, sincerely diversification of our ugly Economy.

    • The Economy is diversified, Oil is less than 15% of our economy. the problem is our fx inflows are not diversified today

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