EMPIRICAL ANALYSIS OF THE IMPACT OF MACROECONOMIC VARIABLES ON EXCHANGE RATE: AN EVIDENCE FROM NIGERIA
Awatai Abdu Usman; Nanfa Nimvyap & Mary Pam
Department of Economics
Plateau State University, Bokkos, Nigeria
E-mail:uawatai72@gmail.com; Corresponding Author: Awatai A.U
ABSTRACT
The major aim of this research is to provide empirically the evidence on the relationship between Real Exchange rate (REXR) against US dollar and macroeconomic variables in Nigerian economy from 1985 to 2017. This research has taken real exchange rate as dependent variable and some other macroeconomic variables are as independent variables. To examine this relationship the ordinary least square regression (OLS) technique is used. The result shows that inflation rate (IFR) is negatively significant at 10% level, the foreign direct investment (FDI) is negatively significant at 5% level, Gross domestic product (RGDP) is negatively significant at level 5% and Money supply (MS) is positively significant at 5% level, interest rate (IR) is positively significant at 5% level of significant with real exchange rate (REXR). The INF and FDI is negatively forced the exchange rate mean that when the values of these variable is decrease the value of exchange will be increasing but in case of RGDP is Vice versa. While the ARCH LM test provides result that there is no serial correlation and the heteroskedasticity test is used reveal that there is no heteroskedasticity. This research work will be useful to international investors, domestic businessmen and academicians in the country.
Key word: Macroeconomic variables, Exchange rate, Ordinary Least Square, Conditional Heteroskedasticity.
