Open AccessIMPACT OF EXCHANGE RATE FLUCTUATIONS ON DOMESTIC INVESTMENT IN NIGERIA (1986-2017)
Author(s) -
Udeh Samson Okey,
Edeh Chukwudi Emmanuel
Publication year - 2020
Publication title -
epra international journal of economic and business review
Language(s) - English
Resource type - Journals
eISSN - 2349-0187
pISSN - 2347-9671
DOI - 10.36713/epra3013
Subject(s) - exchange rate , gross domestic product , economics , currency , monetary economics , investment (military) , swap (finance) , distributed lag , foreign direct investment , devaluation , time series , international economics , macroeconomics , econometrics , finance , statistics , mathematics , politics , political science , law
The major objective of this study is to analyze the impact of exchange rate fluctuations on domestic investment in Nigeria, using annual data covering the period 1986–2017. Time series data on domestic investment, gross domestic product, interest rate, financial deepening and exchange rate were obtained from the Central Bank of Nigeria Statistical Bulletin 2017 edition. The technique of Autoregressive distributed lagged modeling (ARDL) is adopted to examine the time series data. Findings reveal that the relationship between exchange rate fluctuations and domestic investment in Nigeria is negative. However, exchange rate fluctuation has no significant impact on domestic investment in the long run p(t) value 0.6201> 0.05) and short run p(t) value 0.6244 > 0.05). The study suggests that monetary authorities in Nigeria should strive for currency swap agreements with other nations that trade heavily with Nigeria, for example, India, Turkey, United Kingdom. This would help in mitigating the effects of currency fluctuations in the foreign exchange market.KEYWORDS: Domestic investment, Exchange rate fluctuations, ARDL, GDP