FRIDAY, 22nd October, 2021: Data from the Central Bank of Nigeria has revealed that Nigeria's external reserves gained $3.98bn in three weeks, which has caused a rise above the 40bn mark.
The CBN data showed that the reserves rose to $40.76bn on October 20 from $36.78bn as of the end of September.
It further showed that the reserves which had maintained a growth trajectory in recent weeks had risen by $2.76bn in September from $34.02bn at the end of August.
Speaking as regards this, A professor of economics and Chairman, Goldmark Education Academy, Benin City, Mike Obadan stated that the value of a country's currency is determined by the strength of the economy in terms of its production capacity and productivity, structure, and diversification of the export production base.
Obadan, who is a former director-general, National Centre for Economic Management and Administration, Ibadan, Nigeria, said, ‘A vibrant and diversified productive real sector of the economy saves a nation the disbursement of scarce foreign exchange for the import of finished goods and production inputs, especially where these could be produced locally, and reduces pressure on foreign exchange demand.
“In the same way, an export-oriented production base contributes substantially to foreign exchange supply which in turn strengthens the local currency.
“But in Nigeria, these desired attributes have not been achieved. Hence, the heavy dependence of the country on the oil sector for foreign exchange and government revenue creates instability in the naira exchange rate.”
According to him, there is a direct correlation between the oil market and the naira exchange rate.