International Journal of Management and Economics

authors
Obayori, Joseph Bidemi, George-Anokwuru Chidinma Chioma

abstract
The paper examined exchange rate variation and economic growth in Nigeria from 1981-2018. The specific objectives of the paper were to; examine the impact of exchange rate variation on economic growth in Nigeria; and determine the impact of exchange rate on economic growth in Nigeria. To achieve the objectives, secondary data sourced from CBN statistical bulletin was used and the technique of ARDL was applied. The stationarity test via ADF showed that all the variables were stationary prior further estimations to prevent false regressions results. The error correction term in the model has the right negative sign and statistically significant at 5% conventional level with the speed of adjustment at 64.88%. The R² value of 66%, showed that the model is a good fit. The ARDL short run results showed that exchange rate variation (EXV) had a negative and significant impact on economic growth. Similarly, exchange rate (ECR) had a negative and significant impact on economic growth. In the short run, the coefficient of lag value of RGDP was positively related with the economic growth but statistically not significant at 5% level. The paper concluded that variation in exchange rate influences economic growth in Nigeria. Thus, if the menace of high rate of exchange is not checked, it will weakened Nigeria naira in relation to other international currencies such as Euros, USA dollar and Pound starlings. Based on these findings, the study recommended amongst others that Nigeria government should diversify her product and export opportunities so as to become price giver and not a price taker in the international market. This will strengthen the value of the naira in relation to other international currencies.