EXCHANGE RATE FLUCTUATION AND PERFORMANCE OF MANUFACTURING COMPANIES IN NIGERIA

Exchange rate fluctuation poses a significant threat to the stability of a nation's economy. Every economy must strive to ensure stability in exchange rate to strengthen the purchasing power. The volatile movement of exchange rate in Nigeria induces increase in cost which adversely affects the manufacturing sector. Hence, this study investigated the effect of exchange rate fluctuation on performance of manufacturing sector in Nigeria. Auto Regressive Distributed Lag was used to analyse the secondary data that were collected from Central Bank statistical bulletin and annual reports. The study revealed that there is existence of a long run negative relationship between exchange rate fluctuation and contribution of manufacturing sector to GDP. There is also existence of a long run negative relationship amongst exchange rate fluctuation and manufacturing output in Nigeria. Finally, the study revealed that exchange rate fluctuation affects manufacturing capacity utilization in Nigeria. The study concluded that exchange rate volatility negatively affects Nigeria manufacturing sector. The study therefore recommends that macro-economic variables are known to affect performance of manufacturing sector therefore the monetary policies should be managed in a way that it will be favourable to manufacturing sector in Nigeria.