Empirical Assessment of Foreign Exchange Market Effect on the Nigerian Emerging Economy (original) (raw)
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IJTSRD, 2017
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 Durbin-Watson were used in the interpretation 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 e (1986 to date) is more effective in explaining economic trend in Nigeria. Also, exchange rate has significant positive effect on GDP during the fixed exchange rate era and negative effect the eras floating and all 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 GDP in fixed exchange era; and significant positive effect during the floating and all 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 conclude 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 @ IJTSRD | Available Online @ www.ijtsrd.com | Volume-2 | Issue-1 | 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 ter. The time period covered was 1970 to 2012. The study employed the ordinary least square (OLS) multiple regression technique for the analysis. The test, t-test, beta and 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 trend in Nigeria. Also, exchange rate has significant positive effect on GDP during the fixed exchange rate era and negative effect the eras floating and all-time; ant 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 GDP in fixed exchange era; and significant uring the floating and all-time period; and oil revenue has significant positive effect on the GDP in all the exchange rate regimes (floating, fixed time) in Nigeria. The study thus conclude that exchange rate movement is a good indicator for toring 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 indicate that the floating exchange rate has been a better economic regime for sustainable economic growth in Nigeria. From the findings, it is evident that oil revenue has positive effect in Nigeria and has remained the mainstay of the economy. It is thus recommended among other things that a positive exchange rate stock should be monitored regularly, so as not to allow those that find exchange rate as an avenue of investment like banks and public carry out their business, which is more devasta the economy.
EXCHANGE RATE DETERMINANTS AND THE PERFORMANCE OF NIGERIA'S ECONOMY
The main objective of the study was to assess the impact of some exchange rate determinants on the performance of Nigeria's economy. Annual time series obtained from the Central Bank of Nigeria Statistical Bulletin, covering the period 1981 and 2018 were used in the study. Autoregressive Distributed Lag (ARDL) methodology and Error Correction Mechanism were adopted in the study. The variables used in the study were Balance of Trade (BoT)as dependent variable, and Growth rate of RGDP (GRGDP), External reserve (EXR), Exchange Rate (XR), prime lending rate (PLR) and inflation rate (IFR) as independent variables. Augmented Dickey-Fuller Unit Root test revealed that all the variables were integrated at level and first difference. The existence of long run relationship among the variables was confirmed through ARDL Bounds testing. ARDL long run coefficients showed that GRGDP and EXR relate positively with BoT while XR, PLR and IFR exhibited negative relationship with BoT. Only EXR has significant impact on BoT both in the long and short runs. The ECM revealed that the speed of 59.3 per cent was required to correct the short disequilibrium among the variables. It is recommended that government should work out modalities to attain exchange rate, lending rate and inflation rate that would impact balance of trade significantly and also continue to increase the country's external reserves.
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.
Efect of Foreign Exchange Rate Fluctuations on Nigerian Economy
Annals of Spiru Haret University. Economic Series
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 trend in Nigeria. Also, exchange rate has significant positive effect on GDP during the fixed exchange rate era and negative effect the eras floating and all-time; inflation has insignificant negative effect on G...
Naira Exchange Rate Variation and Nigeria Economic Growth: A Time Series Study
American economic & social review, 2019
This study examined the effect of exchange rate variation on Nigeria economy. The objective was to investigate how Naira exchange rate variations against key currencies affect the country's real gross domestic product. Time series data was sourced from Central Bank of Nigeria statistical bulletin. Real gross domestic products were modeled as the function of United State commodity currency, British commodity currency, Japanese yen currency, Chinese yen currency and French franc currency. The ordinary least square method was used as data analysis techniques. The study used cointegration, unit root, and granger causality test and error correction estimate to study the dynamic effects of commodity currencies on financial market. The study found that naira exchange rate variation with the currencies can explain 65 percent variation on Nigerian real gross domestic products while the remaining 35 percent estimation can be traced to external variables not included in the model. The estimated f-test proved that the model is fit while the estimated DW statistics found the presence of positive serial autocorrelation among the variables. The estimated beta coefficient of the variables revealed that commodity currency of US; Japanese yen and Chinese yen have positive and significant effect on Nigeria real gross domestic products while British pound and French Franc have negative effect on Nigeria real gross domestic products. From the co-integration test, we found at least two co-integrating equation from the trace test and maximum eigenvalue. The granger causality test found unidirectional causality from real gross domestic products to Chinese yen and from French Franc to real gross domestic products. The study found that in the long run, Japanese and Chinese yen and French Franc have negative long run effect on Nigeria real gross domestic products; while United States dollar and British Pound Sterling have positive long run effect on Nigeria gross domestic products. The study recommended amongst others that Monetary and macroeconomic policies should be properly articulated with an impregnable feedback loop, implemented to the letter, and a quarterly examination of the impact on the Naira should be regularly engaged, evaluated, interpreted and ensure that the results and possible remedial action(s) get to the appropriate authority timeously so as to ensure well informed decision(s).
An Econometrics Analysis of the Determinants of Exchange Rate in Nigeria (1980 - 2016)
European Journal of Business and Management, 2017
The paper investigates the determinants of exchange rate in Nigeria using times series data ranging from 1980 to 2016 and employing the Vector Error Correction Mechanism (VECM) to separate the long-run determinants of exchange rate from its short-run determinants. The result from the dynamic model reveals that changes in domestic price level, interest rate differentials, trade openness, government purchases of tradable and non-tradable goods and capital inflow are the major long-run determinants of exchange rate in Nigeria while changes in the domestic price level, interest rate differentials and capital inflow are the major short-run determinants of exchange rate in Nigeria. The study recommended the actions of the monetary authorities towards the maintenance of relative low and stable price level, interest rate capable of attracting foreign investors and the design and implementation of trade policies which tend to increase the inflow of capital from abroad. Keywords: Exchange rat...
The study investigated the impact of exchange rate instability on the Nigerian economy for the period 1986-2020 employing Error correction model. Annual time series data was used and the study specifically sought to, determine the effect of Monetary Policy Rate instability on the Nigerian Economic, ascertain the impact of Interest Rate instability and the Nigerian Economic. Gross Domestic Product is the dependent variables. We applied in our analysis, Phillips-Perron unit root Test, Johansen test for co-integration among variables, Error Correction Model (ECM) was adopted to investigate the linkage of these variables to the Nigerian economy. The co-integration test confirms that there is a long run relationship between Exchange Rate instability and the Nigerian Economy. The estimated result shows that the Exchange Rate Instability has no significant and negative influence on Gross Domestic Product in Nigeria during the period. The result therefore suggests that devaluation of the domestic currency does not lead to improvement in the Exchange Rate stability and hence GDP position of the country. It was therefore recommended that measures to stabilize exchange rate and check its continuous free fall should be carefully considered as a policy option.
Foreign Exchange on the Performance of Nigeria Economy: An Econometric Approach
IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH
The study empirically examined the effect of foreign exchange on the performance of the Nigeria economy. The specific objectives were to; examine the effect of money supply, inflation rate, trade openness on the performance of Nigeria economy. The study employed ex-post facto research. In line with the main focus of this study, secondary sources of data were used. Ordinary least square of multiple regression technique was adopted to establish the effect of independent on dependent variable. Based on the results, the findings showed that exchange rate, money supply, Inflation and trade openness (TO) had significant effect on the performance of the Nigerian economy, while exchange rate and money supply had a negative effect on the performance of Nigeria economy. The study concluded that exchange rate plays a key role in international economic transactions because no nation can remain in isolation. The study recommended thus: In order to address the negative impact of exchange rate on ...
Exchange rate variation and economic growth in Nigeria
International Journal of Management and Economics, 2019
The paper examined exchange rate variation and economic growth in Nigeria from 1981-2018. The specific objectives of the paper were to; examine the impact of exchange rate variation on economic growth in Nigeria; and determine the impact of exchange rate on economic growth in Nigeria. To achieve the objectives, secondary data sourced from CBN statistical bulletin was used and the technique of ARDL was applied. The stationarity test via ADF showed that all the variables were stationary prior further estimations to prevent false regressions results. The error correction term in the model has the right negative sign and statistically significant at 5% conventional level with the speed of adjustment at 64.88%. The R 2 value of 66%, showed that the model is a good fit. The ARDL short run results showed that exchange rate variation (EXV) had a negative and significant impact on economic growth. Similarly, exchange rate (ECR) had a negative and significant impact on economic growth. In the short run, the coefficient of lag value of RGDP was positively related with the economic growth but statistically not significant at 5% level. The paper concluded that variation in exchange rate influences economic growth in Nigeria. Thus, if the menace of high rate of exchange is not checked, it will weakened Nigeria naira in relation to other international currencies such as Euros, USA dollar and Pound starlings. Based on these findings, the study recommended amongst others that Nigeria government should diversify her product and export opportunities so as to become price giver and not a price taker in the international market. This will strengthen the value of the naira in relation to other international currencies.
Determinants of Exchange Rate in Nigeria: A Comparison of the Official and Parallel Market Rates
The Economics and Finance Letters, 2019
The need to understand what drives exchange rates is now very crucial, an understanding of its determinants particularly in a developing nation like Nigeria would indeed aid in policy decisions of the sovereign monetary authorities. The study examines the determinants of exchange rate in Nigeria comparing the official exchange rates and the parallel market rates from the post SAP era of 1986 to 2017 using quarterly time series data. The potential determinants of the exchange rate was identified resting on existing literature viz ; GDP, inflation, interest rates, imports, oil exports, non-oil exports, and reserves. The time series properties were tested utilizing the Augmented Dickey-Fuller (ADF) unit roots test of stationarity, the variables were tested for co-integration and the Auto-regressive Distributed Lag Model (ARDL) was applied. The result suggests that GDP, inflation, interest rates non-oil exports, oil exports and reserves are the major determinants of official exchange rates in Nigeria, while inflation, Non-oil exports and GDP are the major determinants of alternate or parallel exchange rates. Contribution/Originality: The study contributes to the literature by examining the determinants of exchange rate in Nigeria comparing the official exchange rates and the parallel market rates from the post SAP era of 1986 to 2017 using quarterly time series data.