Exchange Rate Volatility and Exports: The Nigerian Scenario

Abstract

This paper investigated the impact of exchange rate volatility on exports in Nigeria utilizing data from 2005Q1 to 2020Q4. The ARCH model and its extensions of GARCH, TARCH and EGARCH models and nominal effective exchange rate were employed to measure exchange rate volatility. The Autoregressive Distributed Lag Bounds test methodology was used to examine the short-run and long-run effects of exchange rate volatility on exports. The findings validated the presence of exchange rate volatility. In addition, the results revealed that exchange rate volatility had a negative and insignificant impact on exports. The study, thus, recommends that the government of Nigeria through the Central Bank of Nigeria should foster stable regimes of exchange rate through the implementation of appropriate policies of the exchange rate. Also, an enabling environment for the production of exportable goods should be provided by the government.

Liquidity, Trading Activity, and Stock Price Volatility

“…Accepting the research hypothesis automatically surely strengthens the model (Arellano and Bond (1991); Ogundipe et al (2014); Sghaier and Abida (2013)). Duru, et al (2022), investigate the effect of exchange rate volatility, real exchange rates, and real GDP of China on ASEAN member nations' bilateral exports to China using the same GMM technique. The justification for the use of the empirical model is because of the nature of the data in which 62 counters are examined across 12 years (2009-2020 inclusive).…”

Volatility and Firm Growth: Do Firm Size and Age Matter?

“…The positive theoretical connection between volatility and the growth of firms is presented by Abel (1983) and Hartman (1972). Duru et al (2022) document the mixed impact of volatility on firm growth. Similarly, Ghosal and Loungani (2000) highlight the negative link between volatility and firms' growth.…”