The nation’s foreign exchange reserves fell by $1.457bn in September, the latest data from the Central Bank of Nigeria showed on Monday. The external reserves, which stood at $45.838bn at the end of August, declined to $44.380bn on September 27, 2018.
Figures from the CBN had earlier revealed that the reserves, which had continued to go down in recent months, fell by $990.98m from $47.11bn in July to $46.128bn on August 23, 2018. The CBN noted that the evolution of the forex market in the country had been influenced by a number of factors such as the changing pattern of international trade, institutional changes in the economy and structural shift in production.
A former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, who described oil as the nation’s major revenue earner, said the reserves had grown in the past because oil price was increasing and production was constant.
He, however, said political uncertainty had led to a decline in foreign investment as many investors were taking their funds out of the country. “So, I believe that what must have happened is that those of them whose investments are short-term like shares and bonds, have found their way out of Nigeria,” he added. He observed that most of the investors had not really been investing in the real sector.
According to Nzekwe, generally, a lot of people are not sure of what will happen during elections. He added that although the government was investing in infrastructure, the projects were mostly being executed by foreigners with foreign materials. He said, “So basically, it will have some impact on the reserves but I believe that the major ones are the foreign investments in the financial market and they are all short-term investments.”