The paper employed econometric tools to analyze time series data sourced from CBN StatisticalBulletin (1980-2009). VAR and Wald tests point out that past value of GDP is significant inexplaining the current values of foreign reserves with the causality effect. The model revealed thatthe EXTR was statistically significant in the current year (-1) but statistically insignificance in the previousyears while among the macroeconomic variables only INFR was significant to EXTR. The study upheldthat accumulation of foreign reserves does not produce satisfactory returns for Nigeria but effortshould be made to create job and enabling environment for openness in trade that in turn increase theGDP of the Nigerian economy.Keywords: Unit Root, Granger Test, VAR, External Reserve, Variables