RAUFF, Saliu Adejare
Department of Economics,
School of Arts and Social Sciences,
Federal College of Education (Special),
Oyo, Oyo state, Nigeria
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The aim of this paper is to empirically analyze the determinants of exchange rate of Nigeria during the time period 1980-2020. The data is taken from various sources WDI (World Development Indicators) and IFS (International Financial Statistics). The real exchange rate (RER) is taken as dependent variable while Gross Domestic Growth Rate (GDPG), Inflation Rate (INFL), Interest Rate (INTR) and Trade Openness (TOP) are used as independent variables. The unit root analysis show that all variables are mixture I(O) and I(1). The result of co-integration analysis shows that all the variables have a long run relationship. After this, Autoregressive
Distributed Lag Model (ARDL) regression was applied. In the short term, GDP growth rate has significant negative relation with real exchange rate. Inflation rate has a significant positive relationship with real exchange rate. Also in the short run, interest rate has a significant positive relation with the exchange rate. While trade
openness has an insignificant but negative relationship with real exchange. Furthermore, the findings in the long
run established that there is significant negative relationship between real exchange rate and GDP growth rate.
This is consistent with short run finding. Also, a significant positive relationship was established between real exchange rate and inflation rate. As shown by the long-term findings, an insignificant positive relationship was established between interest rate and real exchange rate in Nigeria. Also, a negatively insignificant relationship was established between real exchange rate and trade openness. Appropriate policy recommendations were
Keywords: Gross Domestic Growth rate, Inflation, Interest rate, Real exchange rate.

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