This research work is centered on the effects of exchange rate instability on investment in Nigeria. With special emphasis on the purchasing power of average Nigerian and the level of international trade transaction. Without exchange rate, the exchange of goods and services among trading partners will be focused with a lot of problems, which may virtually narrow it down to trade by barter. This exchange also is used to determine the level of output growth and investment of the country. Hence, the rate at which exchange rate fluctuate calls for a lot of attention. However, with the already existing exchange rate policies, a constant exchange rate has not been attained. The rate by which exchange rate fluctuates brings about uncertainty in the trade transaction, and also in the rate of naira has been unstable and continued to depreciate. This has resulted to declines in the standard of living of the population; increase in cost of production (this is because most of the raw materials needed by industries are usually imported), which resulted in cost push inflation. Many test, such as unit root test, which we made use of the battery test and also t-statistics table was used when we found out that real interest rate has a negative effect on the output growth.