ABSTRACT

The study investigated effect of exchange rate fluctuation on economic growth of Nigeria from

1986-2016. It adopted ex post facto research design and extracted data from the central bank of

Nigeria statistic bulletins. The study used real gross domestic product and per capita income as

proxies for economic growth while exchange rate, inflation rate and interest rate were used as the

independent variable. Inflation rate and interest rate were adopted as extraneous, variable. The

researcher conducted unit root test to ascertain the stationarity of the variables. Real gross

domestic product interest and inflation rates are stationary at level while per capital income and

exchange rate variable are stationary at first difference. The study therefore used the Auto

regressive distributed lag (Bound Test) to estimate the relationship of the variable. It was found

that exchange rate has significant effect on real gross domestic product. The study hence

conducted that exchange rate fluctuation has a significant effect on economic growth of Nigeria

and recommends that: (a) government should exchange rate to be determined by the dynamic of

the market so that there would be an even growth in the economy (b) government should ensure

that the purchasing power is based on the reality on the economy with a view to the exchange,

interest and inflation rates and encourage an equal measure of the production of goods and

services.