ABSTRACT

This study was carried out on the effect offoreign exchange reserve and macroeconomic stability in Nigeria using secondary data collectedfrom CBNstatistical bulletin between 1981 and 2018. From the findings ofthe study, it was observed that there is an increase in RGDP as a result of increase in FDI, INFR, DOMS andEXTED anddecrease in EXCIIR within the years underreview. The value of 0.894for R-square implies that 89.4% ofvariations seen in RGDP is being explained by a combination ofthe regressors (FDI, INFR, EXCIIR, DOMS and EXTD) but after adjusting the degrees offreedom, the variation reducedto 79.5%>. The testfor overallsignificant ofthe model f3o = fil = fti = fh [31 0 (all the partial regression coefficient are not equal to zero) is accepted meaning that there is no significant relationship between selected independent variables and RGDP. The hypotheses ofno significant relationship between foreign exchange reserve and macroeconomic stability was accepted meaning that there is no significant relationship between foreign exchange reserve and macroeconomic stability while the hypothesis of no long run relationship between foreign exchange reserve and macroeconomic stability was rejected which shows that there is a long run relationship between national savings and economic growth in Nigeria. The study recommended thatfederal government should work on the nation's exchange rate as it negatively affects macroeconomic stability