Effect of Selected Macroeconomic Variables on External Reserves Management in Nigeria (1981-2022)

Abstract

This study examined the Effect of selected macroeconomic variables on External Reserves Management in Nigeria (1981-2022) with external reserves as a dependent variable and international crude oil price movement, exchange rate volatility, inflation, monetary policy rate, public expenditure, economic growth, external debt service payment, and trade Openness as independent variables. With dataset from the Central bank of Nigeria Statistical Bulletin and Autoregressive Distributive Lag (ARDL) model as the key estimation technique, the study found that crude price movement, economic growth, public expenditure growth, all had positive and significant impact on external reserves management. Exchange rate volatility, monetary policy rate and trade openness were found to have adverse and significant effects on external reserves.  It is therefore recommended that effective and efficient fiscal and monetary policy measures be adopted to enhance the management of external reserves.