Exchange Rate Fluctuations and Economic Growth in Nigeria: An Empirical Analysis Using ARDL Approach

Iheanyichukwu Emmanuel Nkwa, Joachin Chetachi Uchegbulam, Idris Ndakene Abubakar, Ezinne Thelma Anike, Olusola Michael Akinmoyewa, Aishatu Sule Abu

Abstract

The study examines the relationship between exchange rate volatility and economic growth in Nigeria from 1990 to 2023. We employ the Autoregressive Distributed Lag (ARDL) method to investigate the cointegration between exchange rate volatility, interest rate, inflation, money supply and the Real Gross Domestic Product (RGDP). The findings suggest that exchange rates have a positive influence on economic growth, whereas interest rates, inflation, and the money supply have a negative impact in the long term. The error correction mechanism reveals a 9% annual rate of adjustment to long-run equilibrium. Our results suggest that stabilising exchange rates is vital to sustainable economic growth in Nigeria, and this is a consequence of why coordinated macroeconomic policies are essential.

10.22178/pos.121-42


Keywords


exchange rate; economic growth; Nigeria; ARDL; cointegration; monetary policy; inflation; financial stability

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References


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Copyright (c) 2025 Iheanyichukwu Emmanuel Nkwa, Joachin Chetachi Uchegbulam, Idris Ndakene Abubakar, Ezinne Thelma Anike, Olusola Michael Akinmoyewa, Aishatu Sule Abu

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