Exchange Rate In Nigeria Case Study

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ANALYSIS OF THE TRENDS AND BEHAVIOURAL PATTERN OF THE NIARA EXCHANGE RATE AND FOREIGN DIRECT INVESTMENT IN NIGERIA Nigeria has a great potential for attracting foreign investment. It has a large market, represented by a large vital population and it is richly endowed with natural resources mineral deposits especially oil and gas, vegetation, arable agricultural land etc. she also has cheap labor force. Available statistics show that the country has not benefited much from foreign investment flows. The central bank data shows that while net foreign direct investment flows to developing countries have been growing steadily since 1990 the relative share of the increasing flow attracted into the Nigerian economy has been fluctuating and declining. For example out of the US$ 25.0 billion investment inflow into all…show more content…
Also, exchange rate has shown that positive correlation with gross domestic product, thus suggesting that sound exchange rate administration encourages economic growth in key areas of the economy POLICY IMPLICATIONS AND RECOMMENDATIONS From hypothesis one, since there is a non - significant relationship between exchange rate and foreign direct investment, Nigeria has to market itself effectively and undertake consistent and systematic long term planning if it intends to remain an attractive destination of FDI. 1. Exchange rate is identified as the most important determinant of foreign private investment inflows in Nigeria. However, it could be inferred from the results of this study that foreign investment policies are considered investor friendly. 2. Government should invest in infrastructures which give an enabling environment for private investors consequently it will help in attracting FDI to Nigeria. 3. The nation’s monetary authorities should develop and implement measures that will ensure that both inflation and foreign exchange rate are sustained at levels that will ensure increasing inflow of FDI. 4. Policy consistency should be

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