The Impact of Exchange Rate on Remittances Inflow in Nigeria (1990-2023)

Student: Olamiposi Ayobami Adeniyi (Project, 2025)
Department of Economics
Elizade University, Ilara-Mokin, Ondo State

Abstract

ABSTRACT
This paper focuses on the effects of exchange rate fluctuations on the remittance inflows into Nigeria between 1990 and 2023 and employs annual time‑series data sourced in World Bank (WDI) and Central Bank of Nigeria (CBN). As the dependent variable, they have used remittances (LREM) and the exchange rate (EXR) as the key explanatory variable with GDP per capita (LGDP), inflation (CPI), and foreign direct investment (FDI) as controls. Following descriptive analysis suitability of stationarity was tested using Augmented Dickey-Fuller and Phillips-Perron tests; all series are I(1). Based on Johansen cointegration tests, there are more than one long run relationships among the variables. Through these findings, the Fully Modified OLS (FMOLS) estimator was adopted to derive consistent long‑run coefficients and Pairwise Granger causality tests were adopted to explore predictive directions between the series.
The FMOLS estimates show that the exchange rate exerts a negative and statistically significant long run effect on remittances (EXR: –0.0101; p

Keywords
exchange rate remittance inflow Nigeria FMOLS Granger causality naira depreciation economic growth foreign direct investment GDP per capita inflation
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