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Effect Of Foreign Exchange Rate Fluctuations On Nigerian Economy

Author

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  • Lawrence Olisaemeka UFOEZE

    (1Department of Banking and Finance, Chukwuemeka Odumegwu Ojukwu University, Anambra State)

Abstract

This study investigated the effect of exchange rate fluctuations on Nigerian economy. The fixed and floating exchange eras were compared to know the exchange rate system in which the economy has fairly better. The time period covered was 1970 to 2012. The study employed the ordinary least square (OLS) multiple regression technique for the analysis. The coefficient of determination (R2), F-test, t-test, beta and Durbin-Watson were used in the interpretation of the results. The resulted revealed that about 85% of the changes in macroeconomic indicators are explained in the fixed exchange era. In the floating exchange era, 99% was explained while the whole periods has 73% explanatory power, hence the floating exchange era (1986 to date) is more effective in explaining economic trends in Nigeria. Also, exchange rate has significant positive effect on GDP during the fixed exchange rate era and negative effect during the eras floating and all-time; inflation has insignificant negative effect on GDP during the fixed exchange era; significant effect in floating era and significant negative effect in the all-time period; money supply has insignificant negative effect on GDP during the fixed exchange era; and significant positive effect during the floating and all-time period; and oil revenue has significant positive effect on the GDP in all the exchange rate regimes (floating, fixed and all-time) in Nigeria. The study thus concludes that exchange rate movement is a good indicator for monitoring Nigerian economic growth. So far, exchange rate has always been a key economic indicator for Nigeria. The floating exchange period has outperformed the fixed exchange rate in terms of contribution inflation, money supply and oil revenue to economic growth. This indicates that the floating exchange rate has been a better economic regime for sustainable economic growth in Nigeria

Suggested Citation

  • Lawrence Olisaemeka UFOEZE, 2018. "Effect Of Foreign Exchange Rate Fluctuations On Nigerian Economy," Annals of Spiru Haret University, Economic Series, Universitatea Spiru Haret, vol. 9(1), pages 105-122.
    • Handle: RePEc:ris:sphecs:0280
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    References listed on IDEAS

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    Cited by:

    1. Ledisi Giok Kabari & Believe B. Nwamae, 2019. "Stochastic Analysis of the Exchange Rate of Naira, YEN, GBP, CFA and FRANC in Relation to US Dollar and Predicting the Naira for the Year 2025," European Journal of Engineering and Technology Research, European Open Science, vol. 4(6), pages 15-18, June.
    2. Taiwo-Agosu BOLARINWA & Elssy-Chidinma ANOCHIRIONYE, 2024. "Impact Of Exchange Rate Volatility On Economic Growth: 1981-2019 (Ardl Model)," APPLIED RESEARCH IN ADMINISTRATIVE SCIENCES, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 5(1), pages 41-52, April.
    3. repec:bcp:journl:v:6:y:2022:i:7:p:152-163 is not listed on IDEAS
    4. Femi-Olagundoye Mercy, 2024. "Exchange Rate Management and Sectorial Export-Financing in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(8), pages 4332-4350, August.
    5. Amara Priscilia OZOJI & Beatrice O. EZECHUKWU, 2025. "Fluctuating Exchange Rate Regime as the Driving Force for Economic Growth in Nigeria," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 12(2), pages 171-181, February.
    6. Duru, Innocent U & Eze, Millicent Adanne & Saleh, Abubakar Sadiq & Uzoechina, Benedict I & Ebenyi, Gabriel O & Chukwuka, Ekechi, 2022. "Exchange Rate Volatility and Exports: The Nigerian Scenario," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 12(1), pages 11-28.
    7. Ayooluwade Ebiwonjumi & Retius Chifurira & Knowledge Chinhamu, 2022. "An Efficient Estimation Technique for investigating Economic Growth and its Determinants for Nigeria in the Presence of Multicollinearity," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 11(1), pages 107-119, January.
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    • F31 - International Economics - - International Finance - - - Foreign Exchange

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