Nigeria is running low on its stash of the greenback.

The foreign exchange reserves have fallen by $990.98m this month, according to the latest data from the Central Bank of Nigeria, CBN.

The external reserves, which stood at $47.11 billion at the end of last month, declined to $46.128 billion on August 23, 2018.

So, what is going on?

The CBN believes the evolution of the forex market in the country had been influenced by several factors such as the changing pattern of international trade, institutional changes in the economy and structural shifts in production.

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But an analyst and former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said the reserves had grown in recent months because oil price was increasing, and production was constant.

He, however, said political uncertainties had led to a decline in foreign investment as many investors were taking their funds out of the country.

“So, I believe that what must have happened is that those of them whose investments are short-term like shares and bonds, have found their way out of Nigeria,” he added.

He observed that most of the investors had not really been investing in the real sector.

According to Nzekwe, generally, a lot of people are not sure of what will happen during elections.

He added that although the government was investing in infrastructure, the investments in infrastructure were mostly being constructed by foreigners with foreign materials.

He said, “So basically, it will have some impact on the reserves but I believe that the major one is the foreign investment in the financial market and they are all short-term investments.”

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