Title:
EFFECT OF EXCHANGE RATE FLUCTUATION ON NIGERIA EXTERNAL TRADE

Authors:
Nwobia Charles Emeka, Ogbonnaya-Udo Nneka, Okoye John Nonso, Nigeria

Abstract:

This study examined the effect of exchange rate fluctuation on Nigeria external trade from 2000 to 2019. Nigeria economy relies so much on imported goods for its survival. There are four refineries in Nigeria but none of them is functional thereby forcing the government to equally import refined oil even when Nigeria is the highest oil producing country in Africa. The penchant for consuming imported goods makes the exchange rate to fluctuate rapidly and uncontrollably in some cases. The study made use of secondary data sourced from central bank of Nigeria statistical bulletin of various issues from 2000 being the year of monetary authority regime of flexible exchange rate to 2019. The correlation and regression analysis of the Ordinary Least Square (OLS) were used to analyze the data. The result shows that the three variables; exchange rate, balance of payment, and inflation rate have significant effect on the Gross Domestic Product (GDP) and external trade of Nigeria; Exchange rate has a negative effect on the GDP because as it increases, the external trade is negatively affected. Therefore, in order to enthrone a favourable exchange rate that would boost the nations GDP, the government is advised to encourage the export promotion strategies in order to maintain a surplus balance of payment on trade.