ABSTRACT
This study
investigated the effects of macroeconomic variables on foreign exchange rate
policy in Nigerian economy. The main objective of this study was to examine the
impact of economic growth, interest rate, inflation rate and broad money supply
on foreign exchange rate in Nigeria. In order to determine the short-run
dynamics around the equilibrium relationship, the study estimated the model in
the context of Error Correction Mechanism technique. From the estimated
results, interest rate and inflation rate emerged as significant determinants
of foreign exchange rate policy in Nigeria. However, economic growth and broad
money supply emerged insignificant. Thus, the study showed in clear term that
both interest rate and inflation rate are key drivers of the exchange rate
policy in Nigeria. The study further, revealed that Nigeria’s economic growth
which expectedly would have made a significant impact on her exchange rate
policy failed to do so. Based on these findings the study recommends that the
government should keep the inflation rate at low levels given that its changes
over time dictates movements in her exchange rates. More so, the study
recommends that interest rate should be so pegged in order not to discourage
domestic borrowers or foreign investors. Finally, Nigeria’s economic growth
should be made comprehensive so as to impact significantly on her exchange
rate.
EGBUTA, E (2023). Effects Of Macroeconomic Variables On Foreign Exchange Rate Policy In Nigeria:- Egbuta, N. Egbuta. Repository.mouau.edu.ng: Retrieved Oct 12, 2024, from https://repository.mouau.edu.ng/work/view/effects-of-macroeconomic-variables-on-foreign-exchange-rate-policy-in-nigeria-egbuta-n-egbuta-7-2
EGBUTA, EGBUTA. "Effects Of Macroeconomic Variables On Foreign Exchange Rate Policy In Nigeria:- Egbuta, N. Egbuta" Repository.mouau.edu.ng. Repository.mouau.edu.ng, 19 Dec. 2023, https://repository.mouau.edu.ng/work/view/effects-of-macroeconomic-variables-on-foreign-exchange-rate-policy-in-nigeria-egbuta-n-egbuta-7-2. Accessed 12 Oct. 2024.
EGBUTA, EGBUTA. "Effects Of Macroeconomic Variables On Foreign Exchange Rate Policy In Nigeria:- Egbuta, N. Egbuta". Repository.mouau.edu.ng, Repository.mouau.edu.ng, 19 Dec. 2023. Web. 12 Oct. 2024. < https://repository.mouau.edu.ng/work/view/effects-of-macroeconomic-variables-on-foreign-exchange-rate-policy-in-nigeria-egbuta-n-egbuta-7-2 >.
EGBUTA, EGBUTA. "Effects Of Macroeconomic Variables On Foreign Exchange Rate Policy In Nigeria:- Egbuta, N. Egbuta" Repository.mouau.edu.ng (2023). Accessed 12 Oct. 2024. https://repository.mouau.edu.ng/work/view/effects-of-macroeconomic-variables-on-foreign-exchange-rate-policy-in-nigeria-egbuta-n-egbuta-7-2