Introduction:

1.1       Background of the Study:

This term paper goes into the analysis of the external reserves position in Nigerian. It embodies the previous problems currents problems and future recommendation. Its of a great important to the student of financial and business studies and those in economics. It is also important to business consultants and investors.

To be Frank, the important to Nigerian and government stand to the entire Nigerian cannot be over emphasized which stand the chance of ascertaining the Nigerian economy and its external reserves position appropriately. In addition, the management of external reserves of Nigeria attracts a lot of public interest. This is so because unexpected changes in external reserve positions generally effects the welfare of the common man. A good example was the oil exploration and boom period, and the Nigerian shot over herself in reckless flirtation with the new sources of easy money and nation has all but was destroyed by arrogant and selfish political hyphens, our hitherto sources of export and foreign exchange were abandon because of the interest rested on the money generated from oil.

But as a result of all these, Nigerian started importing those food items, which we had hitherto been known for and had constituted to the world’s largest exporters. The face in world oil price over the years caught this country unaware and off balance.

It therefore revealed to what extent we had mismanaged our external reserved. And the nation’s economy was abused by improvident, various incompetent and corrupt regimes who saw leadership as a means to privates good and self-enrichment. Nigerian discovered that value has nothing to tall back on, in absence of petroleum as the nation was wholly depends on money generated from crude oil.

But in essence we must thank the present administration for trying to find out when we left the track of sanity and economics balance and its advice to the nation there is concrete evidence that the spending pattern of our people have rationalized to an extent and agriculture, each crop production are once more assuming their abandoned role Nigerian are now motivates towards the goals of self sufficient, and the export incentive recently released by federal government of Nigerian, will no doubt encourage manufactures to exploits foreign markets to the benefits our external reserves.