EXCHANGE RATE AND ECONOMIC GROWTH IN NIGERIA (1980-2020)

Abstract

The relationship between the exchange rate and economic growth in Nigeria between 1980 and 2020 was investigated in this study. It is important to understand the effects of exchange rate, inflation, and interest rate on gross domestic product (GDP). The Central Bank of NIGERIA provided the information on the variables as well as The National Bureau of Statistics, Nigeria (CBN) Statistical Bulletin, and World Development Indicators. The price of one currency in relation to another currency is known as the exchange rate. The country's rate of output growth is also estimated using this exchange rate. Nigeria has used a variety of exchange rate regimes over the years, and current study is focused on how exchange rates affect the country's economic growth, with a focus on the typical Nigerian's purchasing power and the volume of international trade. In order to achieve this, the conventional linear regression model is utilized, and the ordinary least squares econometric technique is also applied to assess the effect of exchange rate on economic growth. Given the results, this study suggests, among other things, that the federal government, through the CBN, should make sure that exchange rate policy is consistent to allow for a reasonable and stable exchange rate that can stimulate economic growth in Nigeria.