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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.

    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.

    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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    by AG | Feb 15,2017

    psg maria

    The UEFA Champions League round of 16 kicked off yesternight with much thrills than anticipated. A well-organized Paris Saint-Germain F.C (PSG), disgraced almighty Barcelona FC, in a 4 goals thriller. Elsewhere in the night, Benefica grabbed an important 1-0 win against Borussia Dortmund.

    The game between PSG and Barca kicked off by 8:45 Nigerian time, with a full squad line up. PSG started the game in a 4-3-3 formation, with Trapp on the goal post; Meunier, Marquinhos, Kimpembe, Kurzawa on the defense; Verratti, Rabiot, Matuidi were on midfield while Di Maria,Draxler, Cavani played forward.

    Barcelona on the other hand, started the game in their usual 4-3-3 formation with ter Stegen on the goal post; Jordi Alba, Umtiti, Pique and Sergi Roberto on defense; Andre Gomes, Busquets, Iniesta in the midfield while Messi, Luis Suarez, and Neymar started as forwards.

    The game kicked off fairly well but the home team scored their first goal in the 18th minute thanks to a nice finishing by Angel Di Maria. Luis Enrique’s side tried to make equalize, mounting pressure at the 37th minute, but Drexler compounded the woes of the visitors making it 2-0 in the 40th minute.

    The second half kicked off with hopes for the visiting side to turn score, but Di Maria again in the 57 gifted himself another birthday present after he curled the ball around the outstretched arm of Marc Andre ter Stegen and into the top left-hand corner.

    Edinson Cavani made it 4-0 in the 76th minute also bestowing a birthday goal upon himself at the same time  making life difficult for the visiting team.

    PSG will play Barcelona on March 8 2017, for the returning leg of the game.

    Meanwhile, elsewhere last night, Benefica grabbed an important 1-0 win against German side, Borussia Dortmund.

    Tonight, (Wednesday Feb. 15 2016), Real Madrid will host Italian side, Napoli while German side, Bayern Munchen will host Arsenal FC. All game will kick off by 8:45pm Nigerian time.

    What are your takes? Share your predictions and you could win fantastic prizes.

    Leave a Reply here ( use your social profile below to ensure immediate appearance of your comment)



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