IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 10 NO. 11 2024
DOI: 10.56201/ijebm.v10.no11.2024.pg127.141

---

Exchange Rate and Economic Growth in Nigeria

Dr. (Mrs) Lawrence, Blessing Aturuchi, Dr. Wosu Chidi

---

Abstract

Exchange rate being the value for which the Naira could exchange for another has been found to be volatile in Nigeria as it accounted for the sluggish economic performance and distorted growth pattern. The study set out to find if a relationship exist between the gross domestic product and exchange rate using time series data from 1980 – 2024 and it was discovered that a significant positive relationship exist as the independent variables jointly accounted for the variation in the dependent variable. The value of R2 = 0.645219 implies that about 64 % of the total variation in gross domestic product is explained by the independent variables. The remaining 36% is attributed to the variables not included in the model. The F* = 13.73480 with (31, 2) degree of freedom > F0.05 value (3.32), i.e. Fcal = 13.73480 > F0.05= 3.32. On this account, the null hypothesis is rejected and the alternative hypothesis accepted. This indicates that F-statistics is statistically significant implying that the explanatory variables are significant. Overall, the Durbin-Watson test result of 0.080360 < 2.50 bench mark signifies absence of auto-correlation in the model. From the result, exchange rate management should be taken very seriously while government officials are advised to shun corruption in the system as government creates atmosphere for stability of the exchange rate of the Naira. On interest rate, a total reduction will improve investment and productive activities to create employment and increase output of goods and services.

keywords:

Exchange rate, Interest rate, Naira, Fluctuations, Economic growth

---

References:

Abdoh, W. M. Y. M., Yusuf, N. H. M., Zulkifli, S. A. M., Bulot, N., & Ibrahim, N. J. (2016).
Macroeconomic factors that influence exchange rate fluctuation in ASEAN countries.
International Academic Research Journal of Social Science, 2(1), 89-94.
Abdulkadir., Ali, I. O. Ajibola, B. S. ,Omotosho, Olutope O. A. & Abiola O. A. (2015). Real
exchange rate misalignment and economic growth in Nigeria. Journal of Applied
Statistics, 6 (2), 103 – 131.
Adeniran, J. O., Yusuf, S. A., & Adeyemi, O. (2014). The impact of exchange rate fluctuation on
the Nigerian economic growth: An empirical investigation. International Journal of
Academic Research in Business and Social Sciences, 1(1), 1 – 5.
Aidi, H. O.1, Saidu, I.A., and Suleiman, Hussein, I. (2018). Exchange rate volatility and the
Nigerian industrial sector performance. Saudi Journal of Economics and Finance, 208-215.
Alagidede, P., & Ibrahim, M. (2017). On the causes and effects of exchange rate volatility on
economic growth: Evidence from Ghana. Journal of African Business, 18(2), 169-193.
Alasha, R. U. (2020). The Impact of exchange rate fluctuations on economic growth in Nigeria.
Department of Economics, Faculty of management and Social Science, Baze University,
Abuja. Project Paper.
Ani, G. A., & Udeh, S. N. (2021).Exchange rate and economic growth in Nigeria. Advance
Journal of Management and Social Sciences, 5 (5), 18-26.
Anifowose, A.D (2021) Economic growth and exchange rate dynamics in Nigeria. Imo State
University /Business & Finance Journal, 12(1), 23-34.



Anyanwu, F. A., Ananwude, A. C., and Okoye, N. T. (2017). Exchange Rate Policy and Nigeria’s
Economic Growth: A Granger Causality Impact Assessment. International Journal of
Applied Economics, Finance and Accounting, 1(1), 1 – 13.
Asteriou, D., Masatci, K., & P?lbeam, K. (2016). Exchange rate volatility and international trade:
International evidence from the MINT countries. Economic Modelling, 58(3), 133-140.
Avdjiev, S., Bruno, V., Koch, C., & Shin, H. S. (2019). The dollar exchange rate as a global risk
factor: evidence from investment. IMF Economic Review, 67(1), 151-173.
Ayobami, O. T. (2019). Exchange rate volatility and the performance of manufacturing sector in
Nigeria (1981 – 2016). African Journal of Economic Review, 7(2), 27–40.
Bakhshi and Ebrahimi, 2016). The effect of real exchange rate on unemployment. Marketing and
Branding Research, 3(1), 4 - 13.
Cassel, V. A. I. (2017). An Empirical investigation into the relationship between exchange rate
volatility and economic growth in Liberia (1980 to 2012). A Thesis Submitted in Partial
Fulfillment of the Requirements for the Degree of Master of Science in
Economics?of?the University of Namibia, 1 – 74.
Emerah, A. A., Adeleke, E. & David, J. O. (2015). Exchange rate volatility and economic growth
in Nigeria (1986-2013). Journal of Empirical Economics, 4(2), 109-115.
Ewubare, D. B & Ushang, A. U. (2020). Exchange rate fluctuations and economic growth in
Nigeria (1981 - 2020). International Journal of Development and Economic
Sustainability, 10(1), 41-55.
Ezebunwo, N. (2024).Impact of exchange rate on economic growth in Nigeria. International
Journal of Advanced Economics, 6(6), 243-256.
Fang, Y. (2020). Research on the impact of RMB exchange rate fluctuation on employment in
my country. Academic Journal of Business & Management, 2(6), 87-99.
Fauceglia, D. (2020). Exchange rate fluctuations and quality composition of exports: Evidence
from Swiss product?level data. The World Economy, 43(6), 1592-1618.
Henry, E., Murtadho, A.M & Bhaumik, A. (2020). The relationship between the exchange rate
fluctuations and economic growth in Nigeria. International Journal of Management and
Human Science (IJMHS), 4(4), 11-18.
Idaka, S. E., Ugwoke, R. O., Ajuh, A. I. and Onyeanu, E. O. (2021). Effect of economic variables
on the financial performance of listed firms manufacturing consumer’s goods in Nigeria.
Universal Journal of Accounting and Finance, 9(6), 1235 – 1246.
Iheanachor, Nkemdilim; Ozegbe, Azuka Elvis (2021). The consequences of exchange rate
fluctuations on Nigeria's economic performance: An autoregressive distributed lag (ARDL)



approach. International Journal of Management, Economics and Social Sciences, 10(2-3),
68- 87.
Isola, L. A., Oluwafunke, A. I., Victor, A., & Asaleye, A. (2016). Exchange rate fluctuation and
the Nigeria economic growth. Euro Economica, 35(2), 127-142.
Iyeli, I. I., & Clement, U. (2017). Exchange rate volatility and economic growth in Nigeria.
International Journal of Economics, Commerce and Management, 5(7), 583-595.
Jadoon, A., & Guang, Y. (2019). The effect of exchange rate fluctuations on trade balance of
Pakistan. International Journal of Economic Sciences, 8(1), 68 - 80.
Koirala, S. (2018) An Analysis of the Impact of Real Effective Exchange Rate on Economic
Growth of Nepal. Parvaha Journal of Economic Management, 3(5), 206-216.
Lawal, I.A., Atunde, I. O. & Ahmed, A.A. (2016). Exchange rate fluctuation and Nigeria
economic growth. Euroeconomica, 135 (2), 1 – 15.
Mahonnye, N., & Tenda, Z. (2019). Exchange rate impact on output and inflation: A historical
perspective from Zimbawe. African Journal of science, Technology and development, 53,
717- 725.
Mileva, M. M., E., & Stracca, L. (2017). The real exchange rate and economic growth: Revisiting
the case using external instruments. Journal of International Money and Finance, 73(6): 386-
Musa, K.S., Muhammad, A., Mohammed, N., & Adamu S.(2019) Foreign exchange rate and
economic growth nexus: New evidence from Nigeria (1981 to 2017). Journal of
Economics and Sustainable Development, 10(18), 78-89.
Nsofor, E. S., Takon, S. M., & Ugwuegbe, S. U. (2017). Modeling exchange rate volatility and
economic growth in Nigeria. International Journal of Finance, 2(3), 50-60.
Odoh, C; Ugwoke, O.V., & Onyeanu, E. O. (2023).Exchange rate fluctuations and economic
development in Nigeria. International Journal of Mechanical Engineering and Technology
(IJMET), 14 (03), 46-61.
Olawuni, J. O. (2020). Exchange rate and macro-economic aggregates in Nigeria. Journal of
economics and sustainable development, 3(2), 111-121.
Udeh, S. N., Ugwu, I. J., & Onwuka I. O. (2016). External debt and economic growth: The Nigeria
experience. European Journal of Accounting Auditing and Finance Research 4, 33 – 48.
Ugochukwu, P. U. (2015). Exchange rate volatility and economic growth. Research Journal of
Economics, 3(3), 1-15.



Ufoeze, L. O., Okuma, C. N., Nwakoby, C., & Alajekwu, U. B. (2018). Effect of foreign exchange
rate fluctuations on Nigerian economy. Annals of Spiru Haret University Economic Series,
1(3), 33-345

DOWNLOAD PDF

---

Back