EVALUATION OF EXCHANGE RATE IN NIGERIA TOWARDS THE GROWTH OF INTERNATIONAL TRADE
Abstract
This study evaluated the impact of exchange rate fluctuations on international trade in Nigeria. The general objective was to determine the evaluation of exchange rate in Nigeria towards the growth of international trade. Specifically, the study evaluated the impact of exchange rate fluctuations on Nigeria’s international trade, analyzed the relationship between exchange rate and trade balance, and investigated the effect of exchange rate on the competitiveness of Nigerian exports. The study employed an Ex-post facto research design, utilizing secondary data from five selected food and beverages firms listed on the Nigerian Stock Exchange between 2019 and 2023. Data were analyzed using descriptive statistics, correlation matrix, and Ordinary Least Square (OLS) regression analysis. The findings revealed that exchange rate has a positive and statistically significant effect on Foreign Direct Investment (FDI), while inflation showed a negative but non-significant effect on FDI. The R-squared value of 0.989607 indicated that the independent variables explained approximately 98.96% of the changes in Gross Domestic Product (GDP). The study concluded that exchange rate fluctuations have a significant impact on the Nigerian economy, and maintaining a stable exchange rate is crucial for curtailing inflation, maintaining favorable trade balance, boosting exports, and sustaining economic growth. The study recommended that the government should create incentives for small-scale industries to boost exports, encourage export promotion strategies, implement effective fiscal and monetary policies, provide infrastructural facilities to attract foreign investors, adopt strict foreign exchange control policies, place high tariffs on imported goods, ensure exchange rate liberalization, and maintain minimal interest rates to increase purchasing power.*
Keywords: Exchange Rate, International Trade, Economic Growth, Foreign Direct Investment, Nigeria
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