Now That $1 Equals N200, Here is a ‘Doomsday’ Conspiracy Theory of What’s Next

The Naira has finally hit N200 in the black market and it appears it has no way of coming down at least not now. The CBN has tried all it could to stop speculations but it appears the more it tightened the screw the loser its hold on the naira gets. People have called me asking what is likely to happen next. Well, since I am don’t have a crystal ball all I can do is project based on experience and assumptions. Here is what might happen next;

• The CBN will likely release a new set of rules hoping to tighten yet another leaking hole
• The CBN will then loosen another screw hoping to restore some liquidity to the system. Don’t worry I am not being silly, flip flopping is an art for the Big Bank
• The CBN will devalue after the elections if things remain this bad
• Dollars will be scarce in Lagos for a few days since the round trippers (some banks and BDCs) have been restricted from selling dollars purchased at the Interbank. As such, black market operators will not have dollars to sell
• Those who own dollars are basically kings as we speak. If you don’t know that, now you know.
• There is no ceiling or floor at least in the short term. Forget what the Mallam tell you, you can sell your dollars for N250 if you wish regardless of what they tell you. Just look for one desperate politician
• For those paying school fees abroad or having one service or the other to pay for, too bad if you haven’t hedged. If you like to pay in instalments (like I often do) then your cost just went up. It’s better you pay with your debit cards
• Paypal and Naira Debit cards eligible for use abroad just became king. Better to transact at the interbank than to buy dollars on the street.
• Some BDC’s might be forced to close as the honeymoon of round tripping ends. They can’t survive with those margins
• JP Morgan and other foreign investors will scream to the heavens and threaten to pull out of Nigeria as they envisage capital control. The CBN will give them a call again and Aganga might even travel to assuage their concerns.
• Nevertheless, Nigerian bond yields will continue to rise as we borrow more to avoid a fiscal collapse
• The stock market will be as volatile as ever as hot money pours in after the elections. Stocks will crash, rise, crash and rise again.
• Oil price fall will continue to heap a dark cloud over the economy. The government will have to come up with a radical new way to ensure our revenues are guarded.
• Goods and services will be expensive starting February. Schools will increase their tuition, transporters will increase their fare, some consultants will stop accepting naira all together
• Dollar could hit N200 at the Interbank heaping more pressure on the CBN to devalue again and again
• The CBN will get tired of devaluing and consider allowing the naira float to the disgust of Nigerians
• Nigerians in Diaspora will be asked to be patriotic and save the naira. They will be given an incentive to repatriate their forex via official means.
• If it doesn’t work, black market operators might be raided and driven off the streets to ensure you can only sell via official channels
• So many companies will incur massive spikes in cost and employers will lay off more employees.
• Nigerian who were hired as expatriates will be asked to either accept Naira or told to take the moral highway and exit
• Foreign expatriates thinking of coming into Nigeria will have a hard time as immigrations will frown even more and employers will even seek other alternatives.
• Nigerian banks will reduce the spate of consumer loans. There will be fear that many banks will incur huge write offs on consumer loans
• Companies with dollar denominated debts will restructure their loans particularly those who borrowed from local banks. Those who can’t restructure will barely survive
• Nigerian banks will have a hard time borrowing from foreign banks
• Rights issues and public offers will be under subscribed and banks will cringe
• Nigerian banks will come under renewed focus as many might not be able to reach CBN’s deadline to increase capital adequacy ratios
• Some banks might just throw in the towel and asked to be acquired.
• AMCON will get another 10 year extension
• Oil price will bottom out after the Saudis may have won the battle against Shale
• New billionaires/millionaires will be made in Nigeria whilst many more will have their fingers burnt
• What did I miss out?
• We pray things don’t ever get this bad.

UGODRE

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