IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v9y2025i2p88-102.html

Exchange Rate Management in Nigeria: Historical Trends and Policy Insights

Author

Listed:
  • Femi-Olagundoye, Mercy

    (Babacock Business School, Nigeria)

  • Adedokun, Sikiru Adetona

    (Obafemi Awolowo University)

Abstract

The exchange rate is critical in any economy, especially where imports exceed exports. A depreciated local currency boosts export trade by making it cheaper in the international market and increasing foreign exchange inflow. However, it also makes imports expensive and depletes available foreign exchange. The study reviewed the exchange rate in Nigeria on a decade basis for a holistic overview of the rate over six decades. Nigeria’s import trade is massive compared to the export trade. As a result, the demand for foreign currency is constantly rising, and due to insufficient supply, the exchange rate continually depreciates. Different exchange rate systems have been adopted to manage the rate, but none has yielded a desirable sustainable result. The pre-colonial and pre-structural adjustment programme (SAP) eras saw no significant concerns about the exchange rate, with the Naira being stronger than the US dollar, and the rate was fixed throughout. Since the introduction of SAP, different exchange rate systems like the Second-tier Foreign Exchange Market, Autonomous Foreign Exchange Market, Retail Dutch Auction System and Nigerian Autonomous Foreign Exchange Market have been used, yet the Naira has depreciated several times. There is a need to control the demand for foreign exchange, supervise parallel market activities, support export initiatives and monitor the repatriation of export proceeds.

Suggested Citation

  • Femi-Olagundoye, Mercy & Adedokun, Sikiru Adetona, 2025. "Exchange Rate Management in Nigeria: Historical Trends and Policy Insights," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(2), pages 88-102, February.
    • Handle: RePEc:bcp:journl:v:9:y:2025:i:2:p:88-102
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-9-issue-2/88-102.pdf
    Download Restriction: no
    File URL: https://rsisinternational.org/journals/ijriss/articles/exchange-rate-management-in-nigeria-historical-trends-and-policy-insights/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tornell, Aaron & Velasco, Andres, 2000. "Fixed versus flexible exchange rates: Which provides more fiscal discipline?," Journal of Monetary Economics, Elsevier, vol. 45(2), pages 399-436, April.
    2. Pinto, Brian, 1987. "Nigeria during and after the Oil Boom: A Policy Comparison with Indonesia," The World Bank Economic Review, World Bank, vol. 1(3), pages 419-445, May.
    3. Ogiogio, G.O., 1996. "A Statistical Analysis of Foreign Exchange Rate Behaviour in Nigeria's Auction," Papers 49, African Economic Research Consortium.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ramon Moreno, 2001. "Pegging and stabilization policy in developing countries," Economic Review, Federal Reserve Bank of San Francisco, pages 17-29.
    2. Philip R. Lane, 1999. "What Determines the Nominal Exchange Rate? Some Cross Sectional Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 32(1), pages 118-138, February.
    3. Gyimah-Brempong, Kwabena & Johnson, Michael E. & Takeshima, Hiroyuki, 2013. "Assessing the potential and policy alternatives for achieving rice competitiveness and growth in Nigeria:," IFPRI discussion papers 1301, International Food Policy Research Institute (IFPRI).
    4. repec:got:cegedp:84 is not listed on IDEAS
    5. Lin, Hsin-Yi & Chu, Hao-Pang, 2013. "Are fiscal deficits inflationary?," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 214-233.
    6. Felipe Larraín B. & José Tavares, 2003. "Regional Currencies Versus Dollarization: Options for Asia and the Americas," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 6(1), pages 35-49.
    7. Shigeto Kitano, 2009. "Nominal debt and inflation stabilization," International Journal of Economic Theory, The International Society for Economic Theory, vol. 5(4), pages 409-422, December.
    8. María Lorena Marí Del Cristo & Marta Gómez-Puig, 2013. "Fiscal dynamics in a dollarized, oil-exporting country: Ecuador," Working Papers 13-06, Asociación Española de Economía y Finanzas Internacionales.
    9. World Bank, 2005. "Russia : Fiscal Costs of Structural Reforms," World Bank Publications - Reports 8540, The World Bank Group.
    10. Malagon Jonathan & Orbegozo Camila, 2019. "The New Drivers of Fear of Floating: Evidence from Latin America," Journal of Globalization and Development, De Gruyter, vol. 10(1), pages 1-17, June.
    11. Robert-Paul Berben & Jan Marc Berk, 2002. "Requirements for successful currency regimes: the Dutch and Thai experiences," MEB Series (discontinued) 2002-16, Netherlands Central Bank, Monetary and Economic Policy Department.
    12. Cook, David & Devereux, Michael B., 2006. "Capital inflows, fiscal discretion, and exchange rate policy," European Economic Review, Elsevier, vol. 50(8), pages 1975-1992, November.
    13. Rupa Duttagupta & Mr. Guillermo Tolosa, 2006. "Fiscal Discipline and Exchange Rate Regimes: Evidence From the Caribbean," IMF Working Papers 2006/119, International Monetary Fund.
    14. John J. Struthers, 1990. "Nigerian Oil and Exchange Rates: Indicators of ‘Dutch Disease’," Development and Change, International Institute of Social Studies, vol. 21(2), pages 309-341, April.
    15. Alberto Bagnai & Christian Alexander Mongeau Ospina, 2014. "The impact of an exchange rate realignment on the trade balance: Euro vs. national currency - Some preliminary results with a/simmetrie model of the Italian economy," a/ Policy Briefs Series 1401, Italian Association for the Study of Economic Asymmetries, Rome (Italy).
    16. Coulibaly, Issiaka & Davis, Junior, 2013. "Exchange rate regimes and economic performance: Does CFA zone membership benefit their economies?," MPRA Paper 54075, University Library of Munich, Germany.
    17. Michael Harrison & Glenn Treacy, 1998. "Testing for Parameter Instability using the R/S Statistic," Economics Technical Papers 9821, Trinity College Dublin, Department of Economics.
    18. Azam, Jean-Paul, 1999. "Dollars for Sale: Exchange Rate Policy and Inflation in Africa," World Development, Elsevier, vol. 27(10), pages 1843-1859, October.
    19. Guillermo J. Vuletin, 2004. "Exchange Rate Regimes And Fiscal Performance. Do Fixed Exchange Rate Regimes Generate More Discipline Than Flexible Ones?," Econometric Society 2004 North American Winter Meetings 474, Econometric Society.
    20. Guillermo A. Calvo & Frederic S. Mishkin, 2003. "The Mirage of Exchange Rate Regimes for Emerging Market Countries," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 99-118, Fall.
    21. Mahvash S Qureshi & Mr. Atish R. Ghosh & Mr. Charalambos G Tsangarides, 2011. "Words vs. Deeds: What Really Matters?," IMF Working Papers 2011/112, International Monetary Fund.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:9:y:2025:i:2:p:88-102. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.