Exchange Rate Fluctuations and Economic Growth Nexus: An Empirical Evidence from Nigeria
Mamuda Abdu *
A.D Rufa’I College of Education, Misau, Bauchi-State, Nigeria and Department of Economics, Faculty of Social and Management Sciences, Bauchi State University Gadau, P.M.B. 062, Yuli Campus, Bauchi State, Nigeria.
Muhammad Rilwanu Umar
Department of Economics, Faculty of Social and Management Sciences, Bauchi State University Gadau, P.M.B. 062, Yuli Campus, Bauchi State, Nigeria and Adamu Tafawa Balewa College of Education Kangere, Bauchi-State, Nigeria.
Babangida Mohammed
Department of Economics, Faculty of Social and Management Sciences, Bauchi State University Gadau, P.M.B. 062, Yuli Campus, Bauchi State, Nigeria and Misau Local Education Authority, Bauchi-State, Nigeria.
Jimoh Maryam Ajannah
Department of Economics, Faculty of Social and Management Sciences, Bauchi State University Gadau, P.M.B. 062, Yuli Campus, Bauchi State, Nigeria and Department of Business Administtration and Management, School of Business Studies, Federal Polytechnic Buachi, Bauchi-State, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
This research study examined the effect of exchange rate on economic growth from 1986 to 2019 using secondary data sourced from Central Bank of Nigeria Statistical Bulletin [1] of various issues. From 1986 being the year the monetary authority shifted from fixed exchange rate regime to flexible exchange rate regime to 2019. The regression analysis using ordinary least square was used to analyze the data. The result revealed that exchange rate has significant positive effect on economic growth while interest rate and inflation rate have significant negative effect on economic growth. In conclusion, exchange rate promotes economic growth. Therefore, in order to maintain a surplus balance of trade, it is recommended that government should encourage export promotion strategies and also provision of conducive environment, adequate security, effective fiscal and monetary, as well as infrastructural facilities should be available in order to attract foreign investors to invest in Nigeria.
Keywords: Exchange rate, interest rate, inflation rate, economic growth, Nigeria