Implication of exchange rate policies for sustainable development in Nigeria

Abstract

This research study examined the implication of exchange rate policies for sustainable development in Nigeria between 1991 and 2014. Basically there are three (3) types of exchange rate policies, namely; pegged, floating or outright devaluation. The central focus of this study is to find out if the naira exchange rate policies employed at different times have had any significant implication for economic growth and sustainable development in Nigeria. The study made use of secondary data sourced for a period of 22 years. The ordinary least square (OLS) research technique was used to estimate the data with the gross domestic product (GDP) serving as the dependent variable and explanatory variables includes; exchange rate, inflation rate and the interest rate for the period of study. Our findings showed that the exchange rate regime employed notwithstanding, economic growth and development is not often affected or determined by the choice of exchange rate policies in Nigeria, whether pegged, floating or outright devaluation. We therefore recommend that efforts should be geared towards promoting policies that would make the nations economy more vibrant through stable exchange rate and export promotion to help correct the imbalance in foreign trade.