PAPER TITLE :THE EFFECT OF REAL EXCHANGE RATE VOLATILITY ON EXPORT VOLUME IN NIGERIA
FUTA JOURNAL OF MANAGEMENT AND TECHNOLOGY | VOLUME 1 NUMBER 2 2016
- Author(s) : A. Adaramola
This paper examined the effect of real exchange rate volatility on export volumes in Nigeria. The study employed the time series quarterly data for the period of 1970Q1-2014Q4. The analytical method employed was econometric techniques of Johansen Multivariate approach to co-integration as well as the Error Correction Mechanism (ECM). The study also employed the ARCH and GARCH model to determine the presence of volatility in the real exchange rate series. The real export volumes, real exchange rate as well as real exchange rate volatility and all other orthodox determinants of export such as relative price and real foreign income series were non-stationary. They were indeed I (1) series. The estimated result indicated that there was a long run relationship between real exchange rate and its volatility and export volumes in Nigeria. The ARCH and GARCH model showed that the exchange rate was volatile. The paper concluded that real exchange rate uncertainty had significantly and positively impacted on the volume of trade of the Nigerian economy. It was therefore recommended that the monetary authorities in Nigeria should initiate policies and programme that would stabilize naira exchange rate and remove the negative effect of exchange rate fluctuations on Nigeria’s export performance.