EFFECT OF CURRENCY DEPRECIATION ON ECONOMIC GROWTH IN NIGERIA

Abstract

This paper aims to study the effect of currency depreciation on economic growth in Nigeria. The impetus for this study stems from the paradoxical observation that, although Nigeria cannot operate a fixed exchange rate system (currency devaluation) because of its low reserves, but can still Endeavor to increase her reserve to adopt a fixed exchange rate as it has a lot of importance to her economy. The major objective of this research work is to examine how currency depreciation influences economic growth in Nigeria. In the process of carrying out this research work, various variables such as exports, imports, inflation, interest rate, gross domestic product and exchange rate were adopted. The data used in this research were secondary data obtained from the World Development Indicators (WDI). Findings were drawn from the research that the exchange rate has a significant impact on economic growth in Nigeria. Therefore, a recommendation is suggested that there is a need to maintain a stable exchange rate. The Autoregressive Distributed Lag Model (ARDL) was adopted as the estimation technique.