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THE EFFECT OF EXCHANGE RATE FLUCTUATIONS ON THE NIGERIAN ECONOMIC GROWTH
ABSTRACT
Our understanding of the relationship between Exchange rate and Economic growth has been put under test for several reasons. This Thesis aims at examining the effect of Exchange rate fluctuations on the Nigerian Economic Growth using yearly time series data from 1986-2016. The data used are secondary and were obtained from Central Bank of Nigeria statistical Bulletin. Before 1986, Nigeria Economy was operating under a fixed exchange rate regime which from 1986 till date is operating a flexible exchange rate regime. The method applied is the Ordinary Least Squares (OLS) to analyze the data. The result shows that Exchange rate and GDP growth has a negative relationship. A percentage change in GDP growth will decrease EXC by 0.324593. However, the probability value of GDP growth is not statistically significant at 5% thus; we accept the null hypothesis that Exchange rate does not have any vital impact on the Nigerian economic growth which affirms to the analysis advanced by Eme and Johnson (2012). Based on the theoretical exposition advanced in the literature and the results obtained in this study, the thesis recommends that strict foreign exchange control policies should be put in place in order to help in proper determination of the value of the exchange rate. This will thus; in the long run help to strengthen the value of the Naira and also the government has to induce the foreign exchange rate by decreeing positive economic reforms that will reduce the unfavorable effect of exchange rate fluctuation on the Nigerian economy with respect to trade flows and economic growth
Keywords: Economic growth, Exchange rate, fluctuations, Nigeria.