Forex reserves decline by $7b in one year

The nation’s gross foreign reserves has settled at $30.4 billion from $37.4 billion a year earlier, after it lost $7 billion to both speculative attacks and deliberate efforts by the monetary authority to defend the value of the local unit.
 
The development represents 18.7 per cent decline in the aggregate foreign exchange reserves, which has sustained a sliding profile in the last two years and recently in back and forth movement.
 
Reserves help any country’s central bank to intervene against volatile fluctuations in currency by its impact on the exchange rate and increasing the demand for and value of the country’s currency. 
 
It also acts as a shock absorber against factors that can negatively affect a country’s exchange rates and, therefore, the central bank uses reserves to help maintain a steady rate.
 
Nigeria’s reserves levels have been in continuous flux and aggravated with worsening price of crude oil in the international market, the country’s major foreign exchange earner.
 
Already, analysts are divided on the need to devalue the country’s currency given its depreciating value blamed on inadequate reserves, although many are still admire the capital control measure of the Central Bank of Nigeria in an effort to combat the local unit’s value.