In the last 30 days, Nigeria’s Foreign Exchange reserves have dropped by $2.15 billion due to the Central Bank of Nigeria (CBN)’s defense of the naira.
This development occurred as the United States Federal Reserves raised interest rates on September 26, 2018, the Nigerian reserves fell by $1,541,891,539.
The reserves which reduced from $44,458,822,331 on September 26, 2018 to $42,916,930,792 on October 16, 2018, has led to investors voting their monies outside the Nigerian economy.
According to a statement issued by the American Central Bank in September, the Fed decided to lift the benchmark overnight lending rate by a quarter of a percentage point to a range of two percent to 2.25 percent.
Explaining the effects of this on the Nigerian economy and reserves, Isaac Okorafor, spokesperson of the Central Bank of Nigeria (CBN), said the fall in reserves is due to a hike in interest rates by US Federal Reserve and the CBN’s interventions in the forex market.
He explained that investors who had left the world’s biggest economy for emerging markets like Nigeria, Brazil, China, due to low-interest rates are returning to the US, following the increase in rates.
“You can see that the reversal of capital flows which is eating most economies and bringing about depreciation in their currency,” Okorafor had said.
As at Tuesday, October 16, Nigeria’s foreign reserves stood at $42,916,930,792.
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