Nigeria Says "Don't Panic, Banks Are Fine" Amid Currency Collapse, Inflation Spike Concerns

Tyler Durden's picture

A month ago we warned of the looming hyperinflation coming to Nigeria (as well as much of Africa). It appears, following the central banks' rate hike to a record 14% (reach for yield anyone) in an attempt to stall the ongoing currency collapse, that Emefiele is worried, warning of "concern over headline inflation spike." Perhaps most worrying though, amid the chaos, Emefiele advised depositors in banks "to go about your business," adding that there was "no need to panic or worry." Hhhmm..

The rate hike is not working, Spot Naira is tumbling on the day to record lows, and forward rates are signaling much more to come... but don't let that stop Emefiele from jawboning... *NIGERIA'S EMEFIELE:`SO FAR, SO GOOD' ON NEW FX REGIME

 

Emefiele had plenty to say...

  • *NIGERIA'S EMEFIELE: CONCERNED OVER HEADLINE INFLATION SPIKE
  • *NIGERIA'S EMEFIELE: INFLATION SPIKE IS STRUCTURAL
  • *NIGERIA'S EMEFIELE: FOREIGN INVESTORS REMAINED LUKEWARM

And this little gem:

  • *NIGERIA'S EMEFIELE: MORE LIQUIDITY WILL CURB INFLATION (wait what?)

But he saved the best for last...

  • *NIGERIA'S EMEFIELE: BANKING SYSTEM REMAINS STRONG
  • *NIGERIA'S EMEFIELE: NO PANIC OR WORRY IN BANKING SECTOR
  • *NIGERIA'S EMEFIELE: NO NEED TO PANIC THAT A BANK IS IN DISTRESS
  • *NIGERIA'S EMEFIELE: DEPOSITORS IN BANKS GO ABOUT YOUR BUSINESS

May we suggest ever so subtley that now is the time to panic.

As we noted previously, for Nigeria's 175 million-strong population, it appears that Nigeria is about become the next Venezuela, with imminent hyperinflation on deck, as prices soar to keep up with the collapse in the spot rate. 

Of course, what is bad news for the population is great news for capital markets as the "devaluation as a bullish case for stocks" arguments spew forth. Stocks always surge as a country is about to tumble into the hyperinflationary abyss. The question is whether the nominal price increase will keep up with the all too real collapse in the Naira's purchasing power which is about to slam Nigeria. If Venezuela is any indication, the answer is no.

Finally, for those wondering how to trade here, the answer may once again revolve around the Niger Delta Advisors: if Nigeria is unable to export more oil due to supply disruptions and thus inject much needed dollars into its Treasury, the country's financial situation wil get even more dire, leading to an acceleration in the naira's devaluation.  On the other hand should Nigeria's government be successful in taming its offshore funded militants, the naira may be a buy, however that trade would be offset by a short in oil as the world's most acute crude supply disruption comes to an end.

In any case, watch out for unsolicited Nigerian emails from financially erudite locals asking you to buy stocks, bonds, or any other asset class. Those will result in guaranteed losses.

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BandGap's picture

BTFD!

Ha, I still have billions in Zimbabwe bucks I can convert to Nigerian nuggets.

SubjectivObject's picture

Show of hands now:  

< Dont trust Nigerians

< Trust Nigerians

nope-1004's picture

Nigerians aren't the problem.  It's their government, hand in hand with the Clinton Foundation.  Corrupt!

OrangeJews's picture
OrangeJews (not verified) nope-1004 Jul 26, 2016 12:59 PM

"No! No! No! Nigeria is fine. Do not take your money out. Nigeria is not in trouble. If anything, they're more likely to be taken over. Don't move your money from Nigeria. That's just being silly. Don't be silly."

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) ghengis86 Jul 26, 2016 4:05 PM

One of my favorite Nigerian products (no editing by me) :

 

Fbi Headquarters In Washington, D.C.
Federal Bureau Of Investigation
J. Edgar Hoover Building
935 Pennsylvania Avenue, NW Washington, D.C. 20535-0001
Website: www.fbi.gov
 
 
Attention Beneficiary
 
This is the final warning you are going to receive from me do you get me? I hope you understand how many times this message has been sent to you?.
 
We have warned you so many times and you have decided to ignore our e-mails or because you believe we have not been instructed to get you arrested and today if you fail to respond back to us with the payment details below,then we would first send a letter to the MAYOR of the city where you reside and direct them to close your bank account until you have been jailed and all your properties will be confiscated by the FBI,CIA and other enforcement agency. We would also send a letter to the company/agency that you are working for so that they could get you fired until we are through with our investigations because a suspect is not suppose to be working for the government or any private organization.

Your ID which we have in our database have been sent to all the crimes agencies in America for them to inset you in their website as an internet fraudsters and to warn people from having any deals with you. This would have been solved all this while if you had gotten the CERTIFICATE SIGNED,ENDORSED AND STAMPED as you where instructed in the e-mail below. This is the federal bureau of investigation (FBI) am writing in response to the e-mail you sent to us and am using this medium to inform you that there is no more time left to waste because you have been given a mandate. As stated earlier to have the document endorsed, signed and stamped without failure and you must adhere to this directives to avoid you blaming yourself at last when we must have arrested and jailed you for life and all your properties confiscated.
 
You failed to comply with our directives/instruction and that was the reason why we didn't hear from you, as our director has already been notified about you get the process completed yesterday and right now the WARRANT OF ARREST has been signed against you and it will be carried out in the next 48hours as strictly signed by the FBI director. We have investigated and found out that you didn't have any idea when the fraudulent deal was committed with your information's/identity and right now if you ID is placed on our website as a wanted person, I believe you know that it will be a shame to you and your entire family because after then it will be announce in all the local channels that you are wanted by the FBI.
 
As a good Christian and a Honest man, I decided to see how i could be of help to you because i would not be happy to see you end up in jail and all your properties confiscated all because your information's was used to carry out a fraudulent transactions, i called the EFCC and they directed me to a private attorney who could help you get the process done and he stated that he will endorse, sign and stamp the document at the sum of $155 usd only and i believe this process is cheaper for you.

 

(The clownishness goes on for a few more paragraphs then the demand for money... only $155 this time.)

Antifaschistische's picture

LOL...yah....seriously, who has their "investment" dollars tied up in Naira anyway.  They deserve to lose everything.  Let me guess...recent graduates from the Online Futures Trading Academy who were taught to invest without emotion.

WTFUD's picture

Yeah the CFR & World Bank have Nigeria's Interests under control, under their wing. s/c At least 1/3rd of it's Annual wealth is transferred to the West or the Off-shore Accounts of the Elite before the rest of the Saps share out what's left-over.

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) SubjectivObject Jul 26, 2016 12:56 PM

Dear Sir:

I have been requested by the Central Bank of Nigeria to contact you for assistance in resolving a matter. You assistance is requested as a non-Nigerian citizen to assist the Central Bank of Nigeria in moving these funds out of Nigeria. If the funds can be transferred to your name, in your United States account, then you can forward the funds as directed by the Central Bank of Nigeria. In exchange for your accommodating services, the Central Bank of Nigeria would agree to allow you to retain 10%, or US$4 million of this amount...

dynomutt's picture

I don't have that kind of scratch, but perhaps some tokens for the local McSwineys would be to your liking?

SoDamnMad's picture

I use to love these scams. First it was the blue, international envelopes and then came the internet. More fun was hearing about the people who were GREEDY enough to believe the scams; first sending money, then more money and then hopping on an airplane to find out why the oil prince in the Ministry of Minerals had only drained their bank account and not forwarded the 5 million as promised.  (I figure they vote for the Clinton's and that wonderful Global Initiative)

OrangeJews's picture
OrangeJews (not verified) SubjectivObject Jul 26, 2016 12:58 PM

Nothing to see here.

ATM's picture

"When things get serious you have to lie"

And if you have only a few measly billion Zimbabwe dollars I feel bad for you. I have well over 10 quadrillion sitting on my desk right now. No lie. (25) $100,000,000,000,000 notes!

Mungo9000's picture

Only billions?
I have hundreds of trillions!!! 

silverer's picture

Which makes me think. Did Robert Mugabe ever say that the banks will be fine?

noideaxxx's picture

who cares about Nigeria? Is it a systemic risk? Angola is next.

pods's picture

An African nation is having currency problems?

I am Jack's complete lack of surprise.

123dobryden's picture

mayhem is coming, and of unique proportions

el mago's picture
el mago (not verified) Jul 26, 2016 12:53 PM

What makes me panic is the "everything is fine"!

bentaxle's picture

What makes me panic is the "everything is fine"!

Oh darn...now I'm worried

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Jul 26, 2016 12:53 PM

Are they still friends with the Clintons?  If so then I believe them that they are fine.

Ghost of Porky's picture

Send them Jimmy Carter. He'll fix everything.

BandGap's picture

I am trying to visualize a Nigerian bank. You know, something out in rural Nigeria with a drive up ATM. This is a tough one.

More Ammo's picture

And the shirt and shoes required sign by the door...

Ghost of Porky's picture

How do you fit a goat into the tiny ATM deposit slot?

lasvegaspersona's picture

Thank goodness Africa is way over there.

We would not want to catch what they have.

silverer's picture

Too late. They sent it over here.

NEOSERF's picture

Ah to be a newly minted lawyer specializing in International debt instruments...this is where the action will be for the next 20 years.  Guaranteed millionaires

dubaibubble's picture

Michelle Obongo needs to visit and give them a "pep talk", everything will be fine

 

Nigeria is actually a great nation

silverer's picture

I got some really unreal stories a few years back from a Canadian friend, who traveled there on business. The regular grunts on the street aren't bad, but the corruption is everywhere. Police are the last person you ask for help.

freedomfool's picture

"Perhaps most worrying though, amid the chaos, Emefiele advised depositors in banks "to go about your business," adding that there was "no need to panic or worry."

When governments tell you not to panic.... that is the exact time to panic... or better yet start implementing your PLAN "B" or "C".

You do have a plan right???

Peace

giggler321's picture

Yellen's big plan - dump the dollar and ask Nigeria for tips on creating inflation