ABSTRACT

This study focuses on the appraisal of the foreign exchange market (FEM) and Domiciliary Account (DA) operations in international banking. An attempt is made to appraise the extent to which the activities in the foreign exchange market and Domiciliary Account have succeeded in correcting imbalances in the supply and demand of foreign exchange in Nigeria. Various policies and exchange rates management have been put in use over the years. This includes Second - Tier Foreign Exchange Market. Autonomous Foreign Exchange Market and Inter Bank Foreign Exchange Market. Domiciliary Account was introduced in 1985 with the Objectives of stabilizing exchange rates and determining a realistic exchange rate. Money deposit banks also play a role in the determination of exchange rate. In the conduct of this study it laid bare the truth that many Nigerians do not understand the meaning and the reason behind the existence of Nigerian foreign exchange market and Domiciliary Account, although they might have heard about them in mass media, discussions, seminars and even in offices. The required data was collected from Central Bank of Nigeria, Nigerian Deposit Insurance commission and some other related literature. The main statistical technique used in the analysis of the data is the multiple regression analysis. It was discovered that there is no significant relationship between exchange rates and the correction of imUa lances in demand and supply of foreign currencies proxied by exchange rates. The researcher recommends that the federal government should take adequate steps to stem out collusion on the part of the authorized dealers as this inhibits the efficient determination of exchange rate. Also the researcher recommends that Central Bank of Nigeria should create more awareness and participants of foreign trade should be given more accessibility for the adequate use of Domiciliary Account in order to accomplish its objective of stabilizing and correcting imbalances in the supply and demand of foreign exchange in Nigeria. However, there is need for further research in this area of study as this particular research cannot be said to be conclusive in nature.