Exchange Rates and Export Performance in Nigeria

This study examined the short-run relationship between exchange rate dynamics and export performance in Nigeria using annual time-series data covering the period 1995–2024. Specifically, the study investigated the effects of the official Naira/US dollar exchange rate, Bureau De Change (BDC) exchange rate, and maximum lending interest rate on export performance. Secondary data were obtained from publications of the Central Bank of Nigeria. The variables were transformed into logarithmic forms where appropriate and analyzed using the Augmented Dickey-Fuller (ADF) unit root test, Johansen cointegration test, VAR lag selection criteria, and Ordinary Least Squares (OLS) estimation technique. The unit root results revealed that the variables were integrated of order one (I(1), while the Johansen cointegration test indicated the absence of a long-run equilibrium relationship among the variables. The VAR lag selection criteria suggested a zero-lag structure, thereby making dynamic VAR estimation inappropriate. Consequently, the study employed OLS estimation on the stationary differenced variables to examine short-run effects. The findings revealed that the official exchange rate exerted a positive but insignificant effect on export performance, whereas the BDC exchange rate and maximum lending interest rate exerted negative but insignificant effects on exports. The study concluded that short-run exchange rate movements did not significantly explain export performance in Nigeria during the study period. The study recommended export diversification, exchange rate stability, moderate lending rates, and structural reforms aimed at improving productive and export capacities in Nigeria.