Economics and Business
ISSN 2775-9237 (Online)
Published: 29 July 2023
Exchange Rate Fluctuations and Firm’s Survival: Evidence Manufacturing Contribution to the Nigerian Economic Growth
Chukwuma C. Ugwu, Ene I. Okwa, Idemudia Sonia
Federal University Wukari, Nigeria
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Keywords: Exchange Rate, Manufacturing Contribution, Interest Rate, Trade Openness
Exchange rate fluctuation has remained a challenging issue for developing countries and sub-Saharan African region in particular. Despite all the efforts towards a stable exchange rate by the sub-Saharan African countries in the last decades, economic growth has been sluggish in almost all the countries in the region. Objective of this study is to assess the economic impact of exchange rate fluctuations on manufacturing companies’ survival in Nigeria, taking manufacturing contribution to gross domestic product as a proxy for survival. The study adopted Ex Post Facto Research Design and time-series data was used. Relevant secondary data for this study were generated from Central Bank of Nigeria statistical bulletin and the Annual Abstract of the National Bureau of Statistics between 1990 and 2020. The study employed ordinary least square estimation and used regression analysis to test the relationship between exchange rate fluctuations on manufacturing companies’ survival in Nigeria. The study showed that exchange rate and production growth are positively and significantly related. From the result, exchange rate, interest rate and trade openness are statistically significant at 5 percent level while inflation is not. It therefore shows that exchange rate, interest rate and trade openness have effect on the manufacturing contribution to gross domestic product in Nigeria within the period studied. The indication from the result is that exchange rate fluctuation is not good for a growing economy like Nigeria. Exchange rate as the variable of interest in the study appears with correct sign showing that there is a positive and significant relationship between exchange rate and production growth. Based on the research finding, the study therefore recommends that efforts should be made in order to have an effective monetary policy that will guarantee a realistic exchange rate to boost sectorial output performance in Nigeria.
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