External reserve, Foreign exchange reserve, Reserve management, International reserve


Effective management of foreign exchange reserves is one of the major macroeconomic objectives of countries like Nigeria. This is against the background of rapid rise and accumulated challenges currently facing many emerging economies especially oil producing countries. In Nigeria, the reserves has risen from USD4.99 billion in May 1999 to USD38.07 billion as at July 31, 2006 (see table 1). The paper examines the key issues, challenges and prospects of effective management of external reserves in Nigeria and how the Central Bank of Nigeria has fared in coping with these challenges. The recent accumulation of foreign reserves is not peculiar to Nigeria as oil producing countries with similar history and level of exports as Nigeria are accumulating even more reserves. The rising level of reserves has assisted the country in financing its budgetary programs, maintaining exchange rate and price stability and settling its external obligations, in particular the Paris Club debt, thereby enhancing its credit worthiness.

Author Bio

The author is a staff of Central Bank of Nigeria.

Publication Title

CBN Bullion







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