Naira4Dollar promo – Is this an adjustment or playing with mirrors?
Aduke a recovering EndSars victim in Ajah calls Tunde her cousin in New York, a tech guru, and the conversation went this way:
Aduke: Please do not buy me that iPhone 12 anymore, just remit the $1200 through Western Union to me
Tunde: Why should I do that? You had been bothering me for this phone since the lockdown
Aduke: Have you heard about the Naira4Dollar promo? If we do this and you can get money off your friends to remit dollars to me, we can make N5 per dollar for doing nothing.
Tunde: Wow! When did this start? It sounds like Bitcoin to me!
Aduke: That is the problem with you! You are always a dollar short and an hour late. Please just send me the dollars, I will cash it, get N5 bonus and we could do it again and again. Do not forget that this promo is for only 60 days. Let us cash in before they stop.
Do you know the meaning of this conversation, which is taking place across living rooms, beer parlours and chat groups? Since they cannot be vaccinated, they might as well get some dollar for naira palliative.
The implication of this promo, which is well intended, is that it could be bypassed, abused and arbitraged. But it is a scheme that could reduce remittance costs, increase supply of dollars in the autonomous (parallel) market and see the naira appreciate. But as they say, “the sweetness of the pudding is in the eating”
Oil price volatility Vs Ideological backsliding
When in April last year Brent nosedived to $19pb, we all thought hell had broken loose. The only piece of good news at the time was that PMS price dropped to N123/litre, but who needs petrol during a lockdown?
What a difference one year can make! Brent crude is now up 258% to $68pb, but the irony is that the naira is weaker today at N484/$ in the parallel market compared to N450/$ then and we are probably looking at paying N186/litre for PMS. So why this inverse relationship between crude price and the naira value and the linear correlation between the price of PMS and Brent crude? Like they say “we will never know” and some say “that economic theory does not work in Nigeria”….hahaha!!!
This is another riddle that we need to solve but the silver lining is that oil revenues for Q1’21 could climb as high as $11bn!
In this edition of the FDC Bi-monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and the economy at large.
Enjoy your read!