An Assessment Of The Impact Of Exchange Rate Fluctuations On Economic Growth In Nigeria

An Assessment Of The Impact Of Exchange Rate Fluctuations On Economic Growth In Nigeria

Abstract

This study investigates on “ An assessment of the impact of exchange rate oscillations on profitable growth in Nigeria ”. The experimenter usesmulti-regression analysis to capture his result, by applying ordinary least square( OLS) ways. The dependent variable Real Exchange rate( RER) was captured by independent variables which include; Real Gross Domestic Product( RGDP), Real Interest Rate( RINT), Trade Openness( TON), Real plutocrat force( RMS) and Affectation Rate( INF). From the thesis stated in chapter one, “ That Exchange Rate oscillations have impact on profitable growth. Analysis of OLS, showed that independent variables used confirm to the apriori prospects except Real Gross Domestic Product and Affectation. Also, from the results attained showed that exchange rate oscillations in Nigeria can be brought about by trade openness, Real plutocrat force, Real interest rate, but Real Gross Domestic Product and affectation has no effect in Exchange rate oscillations in Nigeria Economic growth, and this may be as a result of inadequacy in data used or mortal factor. Grounded on the findings, the experimenter put forward the ensuing recommendations( i) The operation of demand operation and expenditure switching programs that should stabilize macroeconomic summations including exchange rates and ameliorate the growth performance of the frugality.( ii) The protection of domestic diligence using applicable trade programs is important in order to make domestic goods more competitive in the transnational request.( iii) Government should give acceptable impulses to domestic directors in the form of duty reduction and other subsides, which would reduce product costs and the prices of domestic goods. therefore making them more seductive encyclopedically.

TABLE OF CONTENTS

Title runner

blessing runner

fidelity

Acknowledgement

Abstract

Table of contents

CHAPTER ONE

preface

Background of the Study

Statement of the Problem

objects of the Study

thesis of the Study

Significance of the Study

Limitation of the Study

CHAPTER TWO

LItertaure Review

Theoretical Literature

The Mint Parity Theory

The Purchasing Power Parity Theory( PPP)

The Balance of Payment proposition

The Traditional Flow Model

The Portfolio Balance Model

The Monetary Approach

– Flemming Model

The Dornbush Model

Sources of Variation in Exchange Rate

How Exchange Rates have been Determined

Exchange Rate programs and Macroeconomic summations

Exchange Rate deprecation and Affectation

Exchange Rate and balance of Payments

Exchange Rate and Investment

Empirical Literature

CHAPTER THREE

Methodology

Model Specifications

system of Evaluation

Data needed and Sources

CHAPTER FOUR

Data donation and Analysis of Empirical Results

The Empirical Results

Examination of the Algebraic Signs of the Parameter Estimates

Statistical Test of Significance

Evaluation of the Working Hypothesis

Econometric Test

Counteraccusations of the Results

CHAPTER FIVE

Summary, Conclusion and Policy Recommendations

Summary of the Findings

Conclusion

Policy Recommendations

References

Excursus

Chapter One

Preface

Background Of The Study

Globalization is soaring by the day since the end of the World War II. According to Samuelson( 2002), “ utmost of the world husbandry have been enjoying growing profitable cooperation, widening trade liaison, adding integrated fiscal request and rapid-fire profitable growth ”. We’re thus faced with the stark reality that no nation is an islet unto herself.

transnational trade provides the important profitable links among nations. therefore, as nations trade with other nations, there’s exchange of currencies since every country uses a unique currency for domestic deals.

An exchange rate means the price of one currency in terms of another. It’s the rate at which one currency is changed for the other( Anyanwokoro, 1999109). A fall in exchange rate denotes deprecation while a rise signifies appreciation. As domestic currency depreciates, that of the foreign appreciates andvice-versa.

still, this study focuses only on the appreciation and deprecation of the naira vis- à- vis theU.S Dollar.

thus, exchange rate is an important macroeconomic variable which every government looks up to as they push for macroeconomic stability and profitable progress.

The literal statistics girding the Nigeria exchange rate vis- à- vis theU.S Dollar attained from the Central Bank of Nigeria( CBN) statistical Bulletin( 2005) showed that the exchange rate was0.72 = US1.00 in 1970 and appreciated thus until 1980 when N0.55 was changed per US bone . A turning point was made hence forth as the exchange rate began to cheapen from 1980 to 2005. During this paid; N061, N0.02 and N7.39 per bone were changed in 1981, 1986 and 1989 independently. The trend kept on, as N8.03, N17.29 and N22.05 were changed per US bone in 1990, 1992 and 1993 independently.