IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 9 NO. 7 2024
DOI: 10.56201/ijefm.v9.no7.2024.pg112.125

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Monetary Policy and Exchange Rate Stability in Nigeria: A Poverty Reduction Approach for Entrepreneurial Success

CHUKWUKA, Ernest Jebolise (Ph.D), UDUH, Dominic Marior (Ph.D)

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Abstract

This study is a thorough research investigation into a Nigeria’s current exchange rate volatility problem which has seen Naira become the worst performing currency in Africa. This is a major economic problem in Nigeria right now. The aim of this study is to seek solution to Nigeria’s major economic problem through a qualitative and exploratory review of extant literature of monetary policy or policies, Exchange rate stability and its connection to poverty reduction. The study's findings support the hypothesis that monetary policy and exchange rate stability had a significant impact on Nigeria's poverty rate and reduction. Therefore, it is ideal that monetary authorities implement a low-inflation monetary policy program that will concentrate on the small- and medium-sized business-driven productive sectors of the economy in order to stabilize demand as well as exchange rate and improve the position of the disadvantaged persons. The study confirms a connection between poverty and exchange rate volatility, as well as the unfavorable effect of monetary policy. The study associated fiscal dominance with the ineffectiveness of monetary policy. It seems that during the financial system liberalization era, monetary policy had a very strong effect on the stability of exchange rates. Additionally, the study discovered that exchange rate volatility is typically linked to periods of low foreign exchange reserves and vice versa in terms of external balance.This study discovered that Naira exchange rate stability can be guaranteed when there’s more Export of Nigerian made products and less import of foreign products which increases foreign reserves and strengthens Naira. Government can encourage this through the incentivization of creativity, innovation and small business initiatives. In conclusion, there is a chance that the CBN's monetary policy actions will stabilize the exchange rate. Consequently, the paper notes that the CBN may find

keywords:

Exchange rate stability, monetary policy, Poverty Reduction, Naira devaluation, Price

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