IIARD International Institute of Academic Research and Development

Journal of Business and African Economy (JBAE )

E-ISSN 2545-5281
P-ISSN 2695-2238
VOL. 10 NO. 5 2024
DOI: 10.56201/jbae.v10.no5.2024.pg81.95

---

Impact of Dollar on Naira Exchange Rate on Consumer Purchasing Power in Nigeria

Iyadi Rollins Chiyem (Ph.D), Uyo Emmanuella Elozino

---

Abstract

This study examines the impact of exchange rate fluctuations and inflation on consumer purchasing power in Asaba, Delta State, Nigeria. A cross-sectional survey research design was employed, with data collected from 80 households using a structured five-point Likert scale questionnaire. Simple random sampling was used to select respondents, ensuring a representative sample. The results reveal that 78% of respondents believe exchange rate fluctuations have reduced their ability to purchase essential goods, while 88% report that inflation has further weakened their purchasing power. Statistical analysis indicates a strong positive correlation between exchange rate fluctuations and consumer purchasing power (r=0.586, p<0.01), and a negative correlation with inflation (r=0.260, p>0.01). These findings are consistent with previous research, highlighting the significant effect of exchange rate instability and inflation on the financial security of households. The study concludes that both factors considerably affect consumers' ability to maintain their standard of living and recommends that the government implement policies to stabilize the exchange rate, control inflation, and promote financial literacy to mitigate these effects.

keywords:

Exchange Rate Fluctuations, Consumer Purchasing Power, Inflation

---

References:

Fetai, B., Koku, P. S., Caushi, A., & Fetai, A. (2016). The relationship between exchange rate and
inflation: The case of Western. Journal of Business, Economics and Finance, 5(4), 360-
364
Habanabakize, T. (2021). Determining the household consumption expenditure’s resilience
towards rice, disposable income, and exchange rate volatilities. Economies, 9(2), 87.
https://doi.org/10.3390/economies9020087
Ibukun, C. O., & Adebayo, A. A. (2021). Household food security and the COVID-19 pandemic
in Nigeria. African Development Review, 33, S75–S87. https://doi.org/10.1111/1467-
8268.12515
Iyadi, R. C. (2023). Niche marketing technique and firms survival in the Nigeria
telecommunication sector. Journal of Emerging Trends in Management Sciences and
Entrepreneurship, 5(1), 154–176.
Iyadi, R.C. & Sado, P. (2023). Marketing strategies and consumer purchase behaviour: A focus on
manufacturing firms. Advance Journal of Business and Entrepreneurship Development,
7(5), 1- 24.
Iyadi, R.C. (2023). Customer complain handling strategies and customer retention: evidence from
bakery sub-sector of food processing industry in Nigeria. Journal of Management and
Entrepreneurship Research, 5(6), 1036-1053.
Keho, Yaya. 2019. An Econometric Analysis of the Determinants of Private Consumption in Cote
d’Ivoire. Theoretical Economics Letters 9: 947–58. [Google Scholar] [CrossRef] [Green
Version]
Kocaarslan, B., Soytas, M., & Soytas, U. (2020). The asymmetric impact of oil prices, interest
rates and oil price uncertainty on unemployment in the US. Energy Economics, 86,
doi: 10.1016/j.eneco.2019.104625
Kocaaslan, O, K. (2019). Oil price uncertainty and unemployment. Energy Economics, 81, 577-
doi: 10.1016/j.eneco.2019.04.021
Monfared, S. S., & Ak?n, F. (2017). The relationship between exchange rates and inflation: The
case of Iran. European Journal of Sustainable Development, 6(4), 329-340.
Soe, T. T., & Kakinaka, M. (2018). Inflation targeting and exchange market pressure in developing
economies: Some international evidence. Finance Research Letters, 24, 263–272.
Webster, P., & Neal, K. (2022). The cost of living crisis. Journal of Public Health, 44(3), 475–
476, https://doi.org/10.1093/pubmed/fdac080
World Bank (2023). Nigeria Development Update (NDU) - June 2023 Edition. Available online
at: https://www.worldbank.org/en/country/nigeria/publication/nigeria-development-
update-ndu.

DOWNLOAD PDF

---

Back