EPL WEEK 25 REVIEW AND RESULTS AND STANDINGS - AreaGist.com
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    THE NIGERIA - CHINA FOREX DEAL EXPLAINED


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    Much has been said and celebrated this week about the Nigeria - China Forex deal, but much is undoubtedly yet to be understood about the deal leading to all sorts of interpretations and postulations from different school of thoughts on whether we should at all be celebrating or how loud we should indeed celebrate. As it turns, and like in all other issues 'Nigerian', the school is quite a large one, with discussion participants ranging from Market Women to Economic experts all expressing their opinions even before President Buhari and his team returned to Nigeria with details of the deal. To this end, we are going to attempt to throw some more light on this issue as we see it in the proceeding write up. Please note that this is a very simplified version of the story, brought down to level of the man in the streets. Also note that the figures used here are not the exact rates, but convenient approximations for ease of calculations so as to drive the important points home.

    HOW CURRENCY EXCHANGE WORKS
    For international transaction between two countries to work, there must be a mechanism for the two different to exchange their currencies via their Central Banks to settle the transactions .e.g. if Nigeria buys 600 Chinese Yuan worth of products from China and China buys N20 worth of products from Nigeria, it means currency has to be exchanged between these two parties at an exchange rate of 20 to 600, i.e. 2 to 60 or simply put, a ratio of N1 to Y30 .
    However, there are over 200 currencies in the world today and not every country has the wherewithal to do exchange settlements with every other 199 countries at the same time, most countries just cannot afford it. America is however big enough to do this so for countries who cannot afford it the dollar now becomes the standard international exchange currency. i.e. You can exchange your currency to the US Dollar, and then the US dollar can then be converted to any currency of your choice. This is essentially what is meant when we refer to the dollar as an international Medium of exchange.There are other internationally exchangeable currencies e.g. Euro, Pound etc but they are not as convertible as the dollar.

    Before now the Chinese currency (Yuan) was not easily convertible to the Naira because both countries' Central Banks do not store their reserves in each others currency, thus the only way to transact between China and Nigeria was to first convert either currencies to the dollar. In line with this,facts recently made available showed that 70% of the Nigerian demand for the dollar was to convert eventually to the Yuan to conclude transactions between Nigeria and China. This multiple currency conversions inflates currency price due to what economics call TRANSACTIONAL COSTs .e.g. The bank has to make profit,the Nigerian selling to the black marketers has to make profit and also the black market sellers have to make their profit. This is further complicated by demand,supply and availability issues, adding to the cost of exchange rate.

    THE ADVANTAGE OF THE NEW DEAL
    With this recent agreement between Nigeria and China, the Chinese currency and Nigerian currencies are now directly inter-convertible via their central banks, meaning Nigeria will make Naira available to the Chinese central bank and vice versa. This will enable Nigeria and Chinese business men and women trade together easily knowing their governments will settle the transaction using the prevailing exchange rate. Thanks to this , the cost of converting from the naira to the yuan will no longer be impacted by transactional cost of passing through an intermediary currency - the dollar. This means that it will now be cheaper to convert from naira to yuan.
    For example, prices listed on a popular Chinese trading portal, which quotes the price of goods in both yuan and US dollar, shows a particular leather Handbag quoted as 297yuan or 46dollars, this shows that the dollar exchanges for about 6.5 yuan. Therefore, a Nigerian who wants to buy this bag now has the option to pay in dollars or pay in yuan with varying consequences as follows;


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    EPL WEEK 25 REVIEW AND RESULTS AND STANDINGS

    by AG | Feb 13,2017

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    The far the tension in the English Premier League is higher than we had expected it from the beginning of the season. With more than 25 matches already played in the league; the future seemed to be very clear now, but in football, anything can happen.

    Over the weekend, Arsenal kept their campaign hope alive with a 2-0 win against bottom table strugglers, Hull City. The Gunners took advantage of the poor defense of the Hull City, thanks to a brace from on fire forward, Alexis Sanchez.

    Moving on, Liverpool FC, comfortable beat off Tottenham Hotspur, 2-0 and moving up to 4th place – just a point below Arsenal (3rd ) and Tottenham (2nd) who both have 50 points.

    Elsewhere, on Saturday, Jose Mourinho and his side kept up with the chase grabbing an important 2-0 victory against Watford. Goals from Juan Mata and Anthony Martial made sure the Hornets were sent down to 13th place.

    Other games on Saturday saw West Brom Albion draw 2-2 with Westham United, Southampton 4-Sunderland 0, Stoke 1-0 Crystal Palace, Midllesbrough 0-0 Everton.

    On Sunday, current league leaders Chelsea FC, were held in a 1-1 draw against Burnley. The visitors first scored through a goal from Pedro Rodriguez just 7 minutes into the game, before Burnley equalized at 24th minute through a goal from Robert Brady.

    The home side played their games well, defending their draw for the rest part of the game, while Chelsea missed many chances. One point is not bad for the fans of other clubs, because Chelsea could have led with a whooping 12 points. Chelsea are currently 10 points ahead of Arsenal and Tottenham.

    Similarly on Sunday, Swansea city compounded the woes of fairy tale league champions, Leicester City who are currently battling relegation. Swansea won the Foxes, 2-0, sending them back to 17th place, a point below the relegation line.

    Tonight, Manchester City will battle AFC Bournemouth when they travel to the Dean Court. A win tonight for the Citizens will send them straight to second place.

    What are your expectations from your team? What is your favorite moment for the weekend? Share your comments and you stand a chance to win fantastic prizes.

    EPL Week 25 Results

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