Trade Openness and Exchange Rate Fluctuations Nexus in Nigeria

European Journal of Scientific Research, ISSN 1450-216X / 1450-202X Vol. 138 No 3 March, 2016, pp.139-144

6 Pages Posted: 5 Jul 2016

See all articles by Nelson Nkalu

Nelson Nkalu

Independent

Nathaniel Urama

University of Nigeria Nsukka - Department of Economics; University of Reading, United Kingdom; African Institute for Applied Economics (AIAE)

Fredrick Asogwa

Department of Economics, University of Nigeria Nsukka. Enugu State, South East Nigeria

Date Written: March 4, 2016

Abstract

This study investigates the trade openness and exchange rate fluctuations Nexus in Nigeria using time series data covering from1984 to 2013. The rational for this study is the realization that a viable exchange rate regime that is stable and predictable presents rich vista for economic growth and development through liberalization of trade. The study employed the Ordinary Least Square (OLS) method after a battery of preliminary investigations which include the Augmented Dickey-Fuller (ADF) test for stationarity, and pairwise correlation matrix technique. Our findings include among others that; trade openness impact positively about 59% magnitude on the exchange rate fluctuations or volatility in Nigeria. The causality test conducted using Granger causality procedure shows that there exist unidirectional causality between trade openness and exchange rate fluctuations without a feedback response.

Keywords: Trade Openness, Exchange Rate Fluctuations, Causality, Nigeria

JEL Classification: E32, E37

Suggested Citation

Nkalu, Nelson and Urama, Nathaniel and Asogwa, Fredrick, Trade Openness and Exchange Rate Fluctuations Nexus in Nigeria (March 4, 2016). European Journal of Scientific Research, ISSN 1450-216X / 1450-202X Vol. 138 No 3 March, 2016, pp.139-144 , Available at SSRN: https://ssrn.com/abstract=2804487

Nelson Nkalu

Independent ( email )

Nathaniel Urama (Contact Author)

University of Nigeria Nsukka - Department of Economics ( email )

Department of Economics,
University of Nigeria Nsukka
Nsukka
Nigeria

University of Reading, United Kingdom ( email )

School of Politics, Economics and Int. Relations
University of Reading
Reading, Berkshire RG1 5JG
United Kingdom
+447767906094 (Phone)

African Institute for Applied Economics (AIAE) ( email )

128 Park Avenue
GRA, Box 2147
Enugu, 004021
Nigeria

Fredrick Asogwa

Department of Economics, University of Nigeria Nsukka. Enugu State, South East Nigeria ( email )

Department of Economics,
University of Nigeria Nsukka
Nsukka, Enugu State 4100002
Nigeria

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