Impact of Exchange Rate on the Manufacturing Sector in Nigeria

Adebanjo, Joseph Falaye and Oluwasegun, Eseyin and Adegbola, Otekunrin and Asamu, Festus and Peter, Ogunlade and Ben-Caleb, Egbide and Rasak, Bamidele and Niyi-Oyebanji, Moyinoluwa and Eluyela, F. D. (2019) Impact of Exchange Rate on the Manufacturing Sector in Nigeria. International Journal of Mechanical Engineering and Technology (IJMET), 10 (2). pp. 1568-1583. ISSN 0976-6340 and ISSN Online: 0976-6359

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Abstract

Various studies have been conducted on the impact of exchange rates on the performance of the manufacturing sector and how it influences growth in different climes of the world. These studies have examined; drawing out the relationship between exchange rate and macroeconomic performance, with respect to manufacturing output and its related variables. This study examined the impact of exchange rates on the performance of the Nigerian manufacturing sector using the independent variables of exchange rates, inflation rates, capacity utilization rate, the manufacturing sector’s foreign direct investments, and imports over a period of 25 years (1990-2014). Unit Root test, Johansen co-integration test, Granger causality test and Error Correction Model were used to test for stationarity, long-run relationship, causal relationship, and the short and long run equilibrium relationship respectively. The empirical results of the study shows that a devaluation of the Naira has a negative impact on the performance of the Nigerian manufacturing sector as it was found that exchange rates has a negative significant relationship, long run relationship and causal relationship with the performance of the sector. It was also ascertained from the results that inflation rates(INF), and capacity utilization rates(CUR) have a positive significant relationship with the performance of the sector, while exchange rates, imports(IMP) and manufacturing foreign direct investment(MFDI) have a negative significant relationship with the performance of the Nigerian manufacturing sector. The results of the analysis showed that the independent variables have a significant relationship with the R2 at 64.5%.

Item Type:	Article
Uncontrolled Keywords:	exchange rate; manufacturing; financial sector; real sector; and inflation
Subjects:	H Social Sciences > HM Sociology
Divisions:	Faculty of Law, Arts and Social Sciences > School of Humanities
Depositing User:	Dr. Bamidele Rasak
Date Deposited:	08 Mar 2019 16:22
Last Modified:	14 May 2019 11:03
URI:	https://eprints.lmu.edu.ng/id/eprint/2051

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