The monetary authorities still believe there is no cause for alarm.

But that hasn’t prevented the foreign exchange reserves from plunging below $42 billion, hitting their lowest level in more than eight months.

According to the latest data from the Central Bank of Nigeria, CBN the external reserves, which rose to a high of $47.865 billion on May 10, stood at $41.99 billion as of October 31, the lowest since February 26.

Recall that the Director, Corporate Communications, CBN, Mr Isaac Okorafor, explained early last month that the external reserves had been going down recently because of higher interest rates in the United States.

Okorafor, however, gave an assurance that at $44 billion then, the reserves were sufficient to take care of the nation’s import bill for 17 to 20 months, much more than the three-month standard recommendation.

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According to him, some foreign investors who have gone to emerging markets to take advantage of the high yields have had to go back to the US because of better opportunities there at the moment.

“The drop in our forex reserves is basically as a result of the capital flow reversals arising from rising interest rates in the United States. You will recall that the Federal Reserve has been raising rates and has even given guidance that this would continue in the near term,” he added.

Bloomberg reported on Friday that the CBN had done a good job keeping the naira stable, but it was paying a high price.

Put simply, the CBN has been defending the naira with its blood – that blood is the dollar reserves.

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