Exchange Rate and the Performance of the Nigerian Stock Market

Branch; Ezonebi; Prof. Andabai; Priye Werigbelegha; Ph.D

doi:10.56201/jafm.vol.12.no9.2026.p29.40

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Exchange Rate and the Performance of the Nigerian Stock Market

Branch, Ezonebi and Prof. Andabai, Priye Werigbelegha, Ph.D

Abstract

The study examined the effect of exchange rate variables on the performance of the Nigerian stock market. Employing an ex-post facto research design, the study utilizes time series data spanning from 1998 to 2025, sourced from the Central Bank of Nigeria Statistical Bulletin and AbokiFX. The Ordinary Least Squares model is adopted for analysis, and post-estimation tests, including histogram normality, serial correlation, heteroskedasticity, and the CUSUM test, are conducted to validate the model's reliability. The findings reveal that the parallel exchange rate negatively affects stock market capitalization but is statistically insignificant. The official exchange rate exerts a positive and statistically significant influence on stock market capitalization, indicating its critical role in shaping market performance. The inter-bank exchange rate shows a positive but insignificant effect, suggesting a limited direct impact on stock market performance. Thus, the Naira Cross exchange rate has a negative and statistically insignificant effect, implying that its fluctuations may not substantially influence stock market growth. These findings highlight the importance of maintaining exchange rate stability to foster stock market development. Based on these insights, the study recommends policies aimed at stabilizing the official exchange rate, reforming the inter-bank exchange rate system, reducing the influence of the parallel market through a unified exchange rate framework, and enhancing the stability of the Naira Cross exchange rate.

Keywords

Exchange RatePerformanceNigerian Stock Market.

References

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Exchange Rate and the Performance of the Nigerian Stock Market

Abstract

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References

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