PROBABILITY MODELING OF EXCHANGE RATE FLUCTUATION IN NIGERIA (original) (raw)

Managing Foreign Exchange Rate Risks in Nigeria

study was on managing the exchange rate risk in Nigeria. It sought to appraise the operations of the foreign exchange market in Nigeria in order to ameliorate the exchange rate risk available in the market. In order to achieve this objective, data were obtained from the CBN statistical bulletin. They were tabulated, analyzed and tested using Ordinary least square multiple regression statistical technique. Findings resulting from the test of data showed that there was a significant relationship between interest rate, exchange rate and the gross domestic product of Nigeria. Following the findings, it was recommended that the government should concentrate on policies that would standardize and raise money supply to the real sector that has the tendency to increase the volume of goods available for export and reduce demand for imports. Infant Nigerian produced goods should be given high priority. Measures that could stabilize the Nigeria currency should be pursued with vigor. The invisible hands should be allowed to interplay. The Naira currency should be stabilized at N80:$1 Keywords: Exchange rate, Interest rate, Term of trade, Inflation and Gross domestic product.

FOREIGN EXCHANGE RATE NEXUS AND THE NIGERIA ECONOMY: A THEORETICAL PERSPECTIVE, 1986 – 2018.

European Journal of Accounting, Finance and Investment (EJAFI), 2019

The Study examined Foreign Exchange Rate nexus and the Nigeria economy: a theoretical perspective, 1986 to 2018. The objective of this study was to examine the linkage between the foreign exchange rate and the Nigeria economy. 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 sample focused on Nigeria and the review period covered 1986 to 2018. The study used conceptual, theoretical and empirical works in addition to secondary data trend analysis sourced from the central bank and the World Bank. The findings showed that external reserves, interest rate, inflation rate, oil price index, oil production, foreign direct investments, diaspora remittances, purchasing managers' index, terms of trade, foreign public debts among others have direct effect on foreign exchange rate. The study concludes that there is a nexus between foreign exchange rate and Nigeria macroeconomic variables and recommends amongst others that monetary authorities should develop a stable foreign exchange rate policy and pay close attention to the exchange rate determinants with a view to engendering macroeconomic variables that display positive nexus with the foreign exchange rate. Furthermore, the fiscal and monetary authorities are encouraged to harmoniously work together in blocking leakages from the external reserves account. Keywords: Foreign Exchange rate, Economy, foreign exchange market and management 1.0 Introduction In international Business, goods sold and services rendered must be paid for and in making payments from one currency to another, there must be a basis of conversion which both the seller and buyer must be agreeable to. This is the exchange rate for the desired currency. An exchange rate is the medium by which one currency is converted to another (Esezobor, 2004). This rate depicts the strength of that country's economy, ceteris paribus. Adetifa (2005) defined foreign exchange as any currency other than the local currency. Foreign exchange is the mathematical expression of the international medium of exchange as a process of settling foreign accounts or debts arising from international economic activities. Adetifa (2005) further stressed that exchange rate is the price per unit of one country's currency quoted in terms of another. It is the quantitative expression of a country's currency in terms of another. Jhingan (2004) described Exchange rate as the rate at which a one currency exchanges for another. He further stressed that it is the price of one currency in terms of another currency. It is customary to define exchange rate as the price of one unit of the foreign currency in terms of the domestic currency. According to Adedoyin, Atunde, Ahmed and Abiola (2016) Exchange rate reflects the ratio at which one currency can be exchanged with another currency, it is the ratio of currency prices. It is regarded as the worth of a foreign country's currency in terms of the domestic country's currency. It also specifies how much one currency is worth in terms of the other.

EXCHANGE RATE FLUCTUATIONS AND ECONOMIC DEVELOPMENT IN NIGERIA

IAEME PUBLICATION, 2023

This study examines the relationship between exchange rate fluctuations and economic development in Nigeria. The Nigerian government has implemented various exchange rate regimes over the years, shifting from controlled to deregulated systems. The transition from fixed exchange rates to a free-floating regime was undertaken in the late 1980s as part of broader economic reforms. The objective was to promote economic growth and stability by adopting flexible exchange rates. This paper explores the impact of these exchange rate fluctuations on Nigeria's economic development, considering factors such as price stability, balance of payments, employment, income distribution, and overall growth. The findings contribute to the understanding of the effects of exchange rate policies on the Nigerian economy and provide insights for policymakers.

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...

Exchange Rate Fluctuations and Sectoral Performance of the Nigerian Economy (1980- 2016)

European Journal of Marketing and Economics

The structure of Nigerian economy has changed considerably over the years. The economy is classified into five interrelated sectors; the agriculture, Industry, construction, trade and services (CBN 2016). Some of these sectors have contributed to the national output and government revenue at different point in time. Different exchange rate regimes implemented in the country have had varying degrees of impact on the performance of the economic sectors. Depending on the foreign exchange component of inputs into the various sectors and the export earning potential of each sector, sectoral performance has shown high level of sensitivity to exchange rate fluctuations. Fluctuations in exchange rate affect the cost of production in the various sectors of the economy. It is, therefore, not surprising that exchange rate is among the most watched, analysed and government manipulated macroeconomic indicator as it plays a vital role in a country’s level of trade, which is critical for every fre...

Efect of Foreign Exchange Rate Fluctuations on Nigerian Economy

Annals of Spiru Haret University. Economic Series

International Research Effect of Foreign Exchange Rate Fluctuations ign Exchange Rate Fluctuations on Nigerian Economy

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.

The Effect of Exchange Rates on Nigerians Currency and Projecting the Naira for the Year 2025

American Journal of Data Mining and Knowledge Discovery

Exchange rate instability is a good pointer for monitoring Nigerian currency and it has always been a key economic indicator to sustain Nigeria and her economic growth. Linear regression is a great statistical tool used to find, predict and also to assess whether there is an undeviating correlation and dependences between numerical variables. This study investigates the instabilities in exchange rate of five countries' currencies which includes European Euro, United Kingdom Pounds, Saudi Arabian Riyal, Switzerland swissf and the Nigerian Naira with key interest on Naira. This was done to ascertain whether changes in other countries will affect the exchange rate of Naira. The stable and fluctuating exchange rate of these countries were examined and used to plot a digital signal structure. Data used for this study is the daily exchange rate of five countries' currencies (Euro, Pounds, Riyal, Swissf and Naira) from 12th October, 2005 to 2nd October, 2018 obtained from https://www.cbn.gov.ng/rates/exchratebycurrency.asp. We applied linear regression tool on our source data and also applied the equation for prediction on our coefficients so we were able to predict the exchange for Naira come year 2025 which gave us N311.076. The rate of accuracy (R2) and the coefficient of our model were used in predicting Nigerians exchange rate for year 2025. The 99% rate of accuracy of our model reveals that our model is perfect and the impression from this study is that the exchange rate of other countries affects Naira.

THE EXCHANGE RATE FLUCTUATIONS, DOMESTIC PRICES AND MONETARY POLICY IN NIGERIA

Exchange Rate Fluctuation, Domestic Prices and Monetary Policy in Nigeria

Exchange rate fluctuation is seen as general phenomenon around the globe which might have effect on macroeconomic performances. Economists are also interested in knowing how macroeconomics variable influence the operations of exchange rate especially in developing countries. The study evaluated the macroeconomic effect of domestic prices and monetary policy on exchange rate fluctuation in Nigeria using US$-NIG Real Exchange Rate (REER) using the time series annual data generated from various issues of Central bank of Nigeria and Statistical Bulletin during the study period (1987-2014). The study empirically employs trends analysis, the Johansen Co-integration and Ordinary Least Square techniques. The theoretical framework of this study was based on purchasing power parity (PPP) postulated by Gustar 1921. The results of the ADF unit root test for each of the model at 5% level of significance were analyzed. In the long run, only commodity price and crude oil have a negative significant effect while other variables do not have any significant negative effects on exchange rate fluctuations in Nigeria. The study, therefore, conclude that there were significant relationship between commodity price, Nominal interest rate, Crude oil price, monetary policy and exchange

PROBABILITY MODELING OF EXCHANGE RATE FLUCTUATION IN NIGERIA (original) (raw)

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