Nigeria's Foreign Exchange Continues To Fall

The end to the fall of Nigeria's foreign reserves may not be anytime soon as factors such as strong demand for foreign
exchange, year end expenditure, and elections are predicted to still take a toll on the funds.

"A nation's falling foreign
reserves has two levels of
influence on the economy"
Biodun Adegboye, an economist and lecturer at the University of Lagos said.
"It affects both the external and the internal economic situation of a nation. Anytime we have a depletion, a country loses its credit worthiness, both externally and even internally. Countries that would otherwise have borrowed such an economy funds would become jittery and reluctant to do so."

Mr.Adegboye also said such a
country loses its confidence in economic viability."Look at China; they are seeking ways to grow their foreign reserves. It's over $1 trillion already. The advantage and significance of a strong and solid foreign reserve base is to be able to contain any external shock that may affect the smooth running of the system. Let's assume that there is an external shock and the country cannot generate funds, how do we then push the budget demands and balance its forecast?"

"In recent times, we were told the existing foreign reserves can cover about nine months of imports but at this rate, we cannot say this is what will happen. The lower the months that can be covered however, the worse for an economy."

www.234next.com/csp/cms/sites/Next/Home/5642674-146/foreign_reserves_pressure_continues__.csp?