An Empirical Analysis of the Relationship Between Covid-19 Pandemic and Exchange Rates in Nigeria

Abstract

This study examines the relationship between Covid-19 and exchange rates in Nigeria. The Covvid-19 pandemic has been globally recognized to have affected almost all facets of human activities including financial transactions and international exchanges. This resulted in high cost of dollars and other foreign currencies such as pounds relative to Nigerian currency, naira and the Central Bank of Nigeria had to devalue Naira during the Covid-19 period. It is against this background that this study examines the relationship between Covid-19 and exchange rates in Nigeria because little or no attention was given to empirically investigate such relationship. Therefore, the objectives of the study were to examine the relationship between Covid-19 pandemic and exchange rate and the effect on Covid-19 on exchange rate in Nigeria. Daily data on the buying and selling rates of naira relative to dollars were collected from the CBN while daily data on confirmed and recovery cases of Covid-19 were obtained from the Nigeria Centre for the Control of Disease (NCDC). The study used correlation and regression analysis to analyse the data. The study finds a negative relationship between Covid-19 and exchange rate and the effect of Covid-19 on exchange rate was found to be negative and statistically significant. The study recommends among others that the government should take measures to reduce pressure on the dollars especially during the Covid-19 pandemic period.

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