EXCHANGE RATE FLUCTUATIONS AND ECONOMIC DEVELOPMENT IN NIGERIA (original) (raw)

Does Exchange Rate Regime Affect Economic Development? Evidence from Nigeria

2018

The nexus between exchange rate regime and economic development was examined in this paper. Two distinct phases of exchange rate regimes namely, fixed and floating were adopted in the study. GDP per capita was adopted as proxy for economic development. Data analysis was based on the estimation method of ordinary least squares. Regression was conducted, in the first instance, to determine the overall effect of exchange rate regime on development using the full data sample (1970-2016). In the second instance, the data was disaggregated into fixed regime (1970-1986) and floating regime (1987-2016). The estimates for the full sample period, fixed regime, and floating regime show exchange rate as a significant impediment to development, with the strongest negative impact coming from the floating exchange rate regime. Based on the above findings, we conclude that irrespective of policy adopted, exchange rate constitutes a major factor in the planning and implementation of development-orie...

The Nexus between Exchange Rate Variation and Economic Growth in Nigeria

Singaporean Journal of Business Economics and Management Studies, 2016

This research paper is centered on the nexus between exchange rate variation and economic growth in Nigeria with emphasis to the purchasing power of the average Nigerians and the level of international transaction. Exchange rate fluctuations have been of serious concern to the monetary authorities, policy makers and business tycoons of developing countries, Nigeria inclusive because of the relevance of exchange rate in international trade, investment and in determining the level of output growth of a country. Therefore it is vital to examine the degree at which exchange rate fluctuates which had called for a lot of attention in Nigeria. This study examined the Impact of Exchange Rate Fluctuation on the Nigerian Economic Growth using an annual data of forty-three (43) years covering the period (1970-2013). The standard deviation method was employed to capture and estimate the fluctuation inherent in the model as regards the research's objective. The study employed econometric techniques such as; Multiple Regression Model, Augmented Dickey Fuller (ADF) test, Johansen Cointegration test and the Error Correction Model (ECM). Evidence from this study exhibited that there exists a positive but insignificant impact of exchange rate fluctuation on Nigerian economic growth in both the long run and short run. This result is attributed to the ability of the Nigerian government to effectively regulate some other important macroeconomic variables which can infuriate exchange rate which has thereby helped curtail the effects of exchange rate fluctuation during the study period. This is an indication that monetary authorities might have initiated policies that helped absorb the influence of exchange rate fluctuation on economic growth in Nigeria. Therefore, the government should encourage domestic production of goods and services for Naira exchange rate appreciation and generally to promote economic growth in Nigeria. More so, to maintain and sustain exchange rate and economic stability. In the same vein, the government should pay more attention to other more volatile macroeconomic variables like oil price and inflation rate in Nigeria.

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

Journal of Economics and Sustainable Development

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.

Impact of Exchange Rate Fluctuation on Economic Growth in Nigeria

Asian Journal of Economics and Finance., 2013

This study examines the impact of exchange rate fluctuations on economic growth in Nigeria. The main type of data used in this study is secondary; sourced from Central Bank of Nigeria Statistical Bulletin of various issues. From 1986 being the year the monetary authority shifted from fixed exchange rate regime to flexible exchange rate regime to 2019. The correlation and regression analysis of the ordinary least square (OLS) were used to analyze the data. The result revealed that exchange rate has positive effect but not significant with (â=0.014, t = 1.783, Pns) this affirms previous studies that developing countries are relatively better off in the choice of flexible exchange rate regimes. The result also indicated that interest rate and rate of inflation have negative effect on economic growth but not significant with (â = 0.002, t = 0.015, Pns) and (â = 0.023, t = 0.716, Pns) respectively. Therefore, the study recommended that government should encourage export promotion strategies in order to maintain a surplus balance of trade. In addition, government should provide a conducive environment for trade, adequate security, effective fiscal and monetary, as well as infrastructural facilities that would attract foreign investments in Nigeria.

Effects of Exchange Rate Movements On Economic Growth in Nigeria

This study investigates the effect of exchange rate movements on real output growth in Nigeria. Based on quarterly series for the period 1986 to 2010, the paper examines the possible direct and indirect relationship between exchange rates and GDP growth. The relationship is derived in two ways using a simultaneous equations model within a fully specified (but small) macroeconomic model. A Generalised Method of Moments (GMM) technique was explored. The estimation results suggest that there is no evidence of a strong direct relationship between changes in exchange rate and output growth. Rather, Nigeria's economic growth has been directly affected by monetary variables. These factors have tended to sustain a pattern of real exchange rate, which has been unfavourable for growth. The conclusion is that improvements in exchange rate management are necessary but not adequate to revive the Nigerian economy. A broad program of economic reform is required to complement the exchange rate policy adopted. 1.0 Introduction Exchange rate policies in developing countries are often sensitive and controversial, mainly because of the kind of structural transformation required, such as reducing imports or expanding non-oil exports, which invariably imply a depreciation of the nominal exchange rate. Such domestic adjustments, due to their short-run impact on prices and demand, are perceived as damaging to the economy. Ironically, the distortions inherent in an overvalued exchange rate regime are hardly a subject of debate in developing economies that are dependent on imports for production and consumption. The debate rather focuses on the degree of fluctuations in the exchange rate in the face of internal and external shocks. There appears a consensus view on the fact that devaluation or depreciation could boost domestic production through stimulating the net export component. This is evident through the increase in international competitiveness of domestic industries leading to the diversion of spending from foreign goods whose prices become high, to domestic goods. As illustrated by Guitan (1976) and Dornbusch (1988), the success of currency depreciation in promoting trade balance largely depends on switching demand in proper direction and amount as well as on the capacity of the home economy to meet the additional demand by supplying more goods. On the whole, exchange rate fluctuations are likely, in turn, to determine economic performance. It is therefore necessary to evaluate the effects of exchange rate fluctuations on output growth and price inflation. In Nigeria, the exchange rate policy has undergone substantial transformation from the immediate post-independence period when the country maintained a fixed parity with the British

EFFECT OF FOREIGN EXCHANGE RATE REGIMES ON NIGERIA ECONOMIC DEVELOPMENT, 1986 – 2018

European Journal of Accounting, Finance and Investments, 2019

The Study examined Effect of Foreign Exchange Rate regimes on Nigeria Economic Development, 1986 to 2018. The objective of this study was to examine the effect of foreign exchange rate movements on Nigeria's economic development. The foreign exchange monetary model on which this study was anchored assumes that changes in money supply results to changes in exchange rate either directly or indirectly. The study chose Nigeria as its sample and covered the period from 1986 to 2018. The study used secondary time series data sourced from the central bank of Nigeria and the World Bank and tested the effect of the independent variables (namely-foreign exchange rate, inflation rate and monetary policy rate) on the dependent variable, economic development proxy by Human Development index using the ordinary regression, co-integration and Granger-causality techniques, and tested at the 5% level of significance. The findings showed that foreign exchange rate has positive and significant effect on economic development in the short-run period and an effective co-integration exists between the variables which is also positive and significant. The study concludes that foreign exchange rate has significant effect on economic development of Nigeria and recommends amongst others that monetary authorities should develop a stable and unambiguous foreign exchange rate policy and also, encouraged the fiscal and monetary authorities to galvanize policies and ensure that susceptible leakages from the external reserves balances are blocked.

The Impact of Exchange Rate Fluctuation on the Nigerian Economic Growth: An Empirical Investigation

This research study examined the impact of exchange rate on economic growth from 1986 to 2013. The main type of data used in this study is secondary; sourced from Central Bank of Nigeria Statistical Bulletin of various issues. From 1986 being the year the monetary authority shifted from fixed exchange rate regime to flexible exchange rate regime to 2013. The correlation and regression analysis of the ordinary least square (OLS) were used to analyze the data. The result revealed that exchange rate has positive impact but not significant with (β =0.014, t = 1.783, Pns) this is affirms previous studies that developing countries are relatively better off in the choice of flexible exchange rate regimes. The result also indicated that interest rate and rate of inflation have negative impact on economic growth but not significant with (β =-0.002, t =-0.015, Pns) and (β =-0.023, t =-0.716, Pns) respectively. Therefore, the paper recommended that government should encourage the export promotion strategies in order to maintain a surplus balance of trade and also conducive environment, adequate security, effective fiscal and monetary, as well as infrastructural facilities should be provided so that foreign investors will be attracted to invest in Nigeria

IMPACT OF EXCHANGE RATE FLUCTUATION ON THE ECONOMIC GROWTH IN NIGERIA

This research work is centered on the impact of exchange rate fluctuation on the Nigeria’s economic growth from 1986 to 2015. The main type of data used in this study is secondary; sourced from Central Bank of Nigeria Statistical Bulletin of various issues. From 1986 being the year the Nigerian monetary authority changed from fixed exchange rate system to flexible exchange rate system. The correlation and regression analysis of the ordinary least square (OLS) were used to analyze the data. The result revealed that exchange rate has positive impact but not significant with (co-efficient =0.01275, t = 1.35) this is affirms previous studies that developing countries are relatively better off in the choice of flexible exchange rate regimes. The result also indicated that interest rate has positive impact but not significant with (co-efficient =0.1353, t = 0.26) while rate of inflation have negative impact on economic growth but not significant with (co-efficient = -0.1363, t = -0.69). Therefore, the paper recommended that government should encourage the export promotion strategies in order to maintain a surplus balance of trade and also conducive environment, adequate security, effective fiscal and monetary policies, as well as infrastructural facilities should be provided so that foreign investors will be attracted to invest in Nigeria Keywords: Nigeria’s economic growth, exchange rate, interest rate, inflation rate

The Impact of Exchange Rate Regimes on Economic Growth in Nigeria

The choice and management of an exchange rate regime is a critical aspect of economic management to safeguard competitiveness, macroeconomic stability, and sustainable development. But rather, the country has continued to be at disadvantage in terms of macroeconomic performances as the different regimes have been accompanied by instability and uncertainties, hence the need for the present study to examine the relationship between exchange rate regimes and output growth in Nigeria in different periods from 1970 to 2014. The study employs the Generalized Method of Moments (GMM) to estimate economic growth equation as a result of endogennity problem. In contrast with previous findings, ours study strongly suggest that exchange rate regimes indeed matter in terms of real economic performance in Nigeria as the results reveal that deregulated exchange rate regime spur economic growth in Nigeria as against the whole period and fixed exchange rate regime. All in all, the findings suggest that fixed exchange rates constrain the performance of the Nigerian economy as real exchange rate depicts inverse relationship with economic growth during the whole period and period of fixed exchange regime. It is against this background, that we recommend the sustainability of the regime of exchange rate liberalization that has been in operation from 1986