Impact of Exchange Rate Fluctuations on Economic Growth in Nigeria (1987-2020)

Abstract

This study is to examine the impact of exchange rate fluctuations on economic growth in Nigeria. The independent variables used for this study are money supply, interest rate, inflation rate and real exchange rate. The data used for this study is obtained from CBN statistical bulletin, 2019. The study used cointegration and Error correction mechanism to estimate the long run and short run relationship between the dependent variable and independent variables. The cointegartion result shows that there is a long run relationship between the dependent and the independent variables.  The ECM results of the estimate shows that real exchange rate have positive and significant impact on Real GDP at 5% level of significance. The study therefore recommend that the CBN should track and effectively monitor all operators in the foreign exchange market, especially parallel market operators and other speculators so as to stabilize the Naira exchange rate and achieve steady economic growth.

DOI: 10.7176/JESD/13-14-06

Publication date:July 31^st 2022