The Effect of Exchange Rate Policy on Economic Growth in Nigeria

ABSTRACT The study examined the impact of Exchange rate on economic growth in Nigeria between 1990 and 2023. The study was motivated as a result of instability in the present exchange rate. The specific objectives of the study were to examine the exchange rate fluctuation impact on the economic growth and to assess the effect of exchange rate on Nigeria’s export of goods and services. A secondary data was used, employing a to achieve the stated objectives. The variables used are GDP and non-oil export as the dependent variables, real exchange rates interest rates, inflation rate and degree of trade openness as the independent variables. Economic test shows the a priori criteria of the parameters used to determine if it conforms to the economic theory. The statistical criteria employed are the F test, T-test and R2 which tested for the significance of the parameters. From the analysis of the result, it showed that there is a long relationship between GDP, EXPT and real exchange rate in Nigeria. Exchange rate stability has a positive and significant effect on export and economic growth. An increase in exchange rate stability motivated firms to invest in exportation of goods and services, based industries. Therefore, the study recommends that government should encourage the export promotion strategies in order to maintain a surplus balance of trade and also the government should make an effective policy to enhance both fiscal and monetary policies in order to achieve a stable exchange rate policy.