The Effect Of Exchange Rate Devaluation On The Nigerian Balance Of Payments (18138)

Abstract

This work sets out to examine the relationship between balance of payment and exchange rate. The work is divided into five chapters; chapter 1 gives a general introduction to the subject matter, chapter two gives the general review of literature in the subject matter, chapter 3 gives or states the methodology and specifies the model used for testing. Chapter four runs the required test and provides the result as well as the interpretation and chapter five concludes the findings and recommends policy for the government based on the findings in the test. The ordinary least square regression (ols) method is used to test for R-squared test (explanatory power of the variables), T-test for the reliability, F-test for the overall significance of the exponentials and D.W test which is the econometric criterion for testing for presence of auto regressive scheme. From the result gotten, a 3013% change in balance of payment is caused by a unit change in exchange rate, a 120% change in balance of payment is caused by a unit change in foreign direct investment, and 865821% change in balance of payment is caused by a unit change in trade openness. The result shows a negative relationship between balance of payment and the explanatory variables (exchange rate, foreign direct investment, and trade openness). Since exchange rate devaluation has a negative impact on the balance of payment it is recommended that the government should not consider it a policy for economic development.

Bank: GTBank
Account Name: Prince Orafu
Account Number: 0109980866

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Bank: Diamond Bank
Account Name: Prince Orafu
Account Number: 0065070861