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Exchange Rate Is Low, But Prices Are Still High. Importers Perspective - Business - Nairaland 1l4u3p

Exchange Rate Is Low, But Prices Are Still High. Importers Perspective (310 Views)

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DMechyy: 9:49am On Apr 20, 2024

I have read a couple of reders and plenty expert economic analyst, explaining why the dollar rates is crashing, but prices of goods are still expensive. I find most of the analysis written like a paper, and with plenty statistics and really not relate able to the average Joe. Dollar to Naira was 1,700 to a dollar, but now at 1050. But prices arent crashing. I will give an importers perspective, on why this is happening, and when to expect prices to crash. 1. Averagely, it takes goods shipped through sea. 3 months to get to Nigeria from China. And a week, for Air goods (shipping cost for air goods are too expensive), most goods come through sea. What does that mean ; There are goods, bought, 1 month ago, before the crash in rates, that has not arrived yet. They will get here in June. Those are goods bought at 1,800 to a dollar Before we would experience a price change, it will take between 3 to 4 months from Now. Because goods bought at the current exchange rate, will only get here by July. What that means is, even though the rates are down, the products bought at those rates will only get here by July, practically, real price change will be experienced by then. On the condition that naira continues to gain between now and then. 2. Before the high exchange rates, most businesses were already looking for ways to increase their prices. Oftentimes, customers do not respond well to hike in prices, as you could loose them and lose business. The high rates gave business owners no other option but to increase their prices. Left to the average business owner, the aim is to make more profit. Most businesses were already struggling with margins. Now that rates are down, I can guarantee, prices will go down, but not to prior prices before the naira crash. 3. Greed This is to policy makers. Your decisions have longterm effect on the economy. Have you ever wondered, why just a vehicle breakdown on say, Lagos Ibadan expressway will cause 5 hours hold up? Nothing has changed, just one lane, out of 3 is affected, but it will still cause hold up. Even when the vehicle is towed from the location, the backlog of holdups will still cause extra 2 hours delay. 1 Like

dododawa1: 10:01am On Apr 20, 2024

OBIDENTs at work 1 Like

DMechyy: 12:24pm On Apr 20, 2024

dododawa1: OBIDENTs at work Did you read the piece?