The Effect of Exchange Rate on the Growth of the Nigerian Economy

This study examined the effect of exchange rate on the economic growth of Nigeria. It specifically looked at effect of exchange rate on gross domestic product (GDP), as a proxy of economic growth with interest rate and inflation rate as determinant of exchange rate. Secondary data from the Central Bank of Nigeria Statistical Bulletin were collected for a period of thirty-seven years, 1986 to 2023. Ex-post facto research design was utilized. While some pre and diagnostic tests were carried out to confirm the integrity of the data and their relatedness in both short- and long-term basis, Autoregressive Distributed lag (ARDL) model was employed in the analysis of hypotheses. It was found that while exchange rate and interest rate had significant effect on RGDP, while inflation rate was found to be not significant on RGDP. This implies that exchange rate and interest rate significantly determine economic growth in Nigeria. The study concludes that exchange rate should be handled with utmost concern by experts in the field to avoid unnecessary fluctuations that may inflict unbearable economic consequences on the Nigerian people. The study recommends, among others, the adoption of policies measures that will affect economic growth in Nigeria in such a way that the welfare of the people can be upgraded.