The Impact of Foreign Exchange Market on Economic Growth in Nigeria: 1981-2023

This study examines the impact of the foreign exchange market on economic growth in Nigeria from 1981 to 2023. It explores how exchange rate policies, inflation, interest rates, and trade openness have influenced Nigeria’s Real Gross Domestic Product (RGDP). Utilizing a quantitative research design, time-series data were analyzed using econometric methods, including regression analysis. The findings reveal that while exchange rates positively impact RGDP, interest rates and trade openness exhibit a negative relationship. Inflation, however, has a minimal and statistically insignificant effect on economic growth. The results highlight the importance of effective exchange rate management and monetary policies in fostering economic stability and growth. Based on these findings, the study recommends targeted reforms to stabilize the exchange rate, promote exports, and enhance local production to achieve sustainable economic growth. It examines the interplay between exchange rates, inflation, interest rates, and trade openness, highlighting their roles in shaping the country’s economic trajectory. Using econometric models and time-series data, the analysis reveals significant correlations between exchange rate fluctuations and Nigeria’s Real Gross Domestic Product (RGDP). The study finds that while exchange rate stability is crucial for growth, macroeconomic variables like inflation and interest rates exhibit mixed effects. The research concludes with policy recommendations aimed at enhancing economic resilience through effective exchange rate management and structural reforms.