IMPACT OF EXCHANGE RATE REGIMES ON ECONOMIC DEVELOPMENT IN NIGERIA

Abstract

Changes in exchange rates have a major effect on the imports and exports of the participating countries because of the relative prices of commodities as production and consumption in Nigeria are largely dependent on imports. The purpose of this study is to examine the exchange rate regime on economic development of the country with a view to making relevant recommendations that could mitigate challenges confronting foreign exchange regime in the country. The study was anchored on dependency theory given the need of the state to protect the country’s economy from the vagaries of international capital market. In-depth interviews and a 5-point Likert scale were used to gather primary data. Four hundred (400) questionnaires were distributed in person to respondents selected from the Central Bank of Nigeria (CBN), Nigeria Stock Exchange (NSE), Ministry of Foreign Affairs (MoFA), and Bureau de Change Operators. Based on their professional knowledge of the topics being studied, eight senior staff members with the level of Assistant Director and above were interviewed. Secondary data were generated from the internet, periodicals, and publications of government organizations like the CBN and NSE on the effects of exchange rate regimes and their economic ramifications for Nigerian growth. Simple percentages and absolute frequencies were used in the analysis of personal data of the respondents as well as in the analysis of all data generated from questionnaire, while weighted mean was used in analysing questions and statements related to the research propositions. Data from in-depth interview were analysed using narrative analytic technique, while data from secondary sources were analysed using relational-content analysis. Findings showed, among other things, the poorer the exchange rate regime, the more the level of economic development deteriorates in Nigeria. It is recommended, among other things, given the adverse impact of exchange rate regimes on economic development in Nigeria, the Federal Government and relevant organisations and agencies in Nigeria such as the Central Bank of Nigeria and Nigeria Stock Market should ensure that exchange rate regimes are used as a tool for mitigating the challenges of unemployment, inequality and poverty in Nigeria.