Exchange Rate Volatility and Productivity in Nigeria: An Empirical Analysis

Monica A. Orisdare

Obafemi Awolowo University, Ile-Ife, Nigeria.

Sodik Olofin *

Obafemi Awolowo University, Ile-Ife, Nigeria and Nigerian Economic Summit Group, Nigeria.

*Author to whom correspondence should be addressed.


The volatile movement in Nigeria’s exchange rate constitutes a severe headwind to the economic activity in the country and the eventual performance of productivity and economic growth. Therefore, this study sought to investigate the impact of exchange rate volatility on productivity in Nigeria. Due to the seemingly mixed order of integration in the variables, the Johansen and Bound cointegration tests were used to establish that there are long-run relationships between the variables. Following the cointegration tests, the analysis of the study was based on the Autoregressive Distributed Lag (ARDL) Model. The findings from the study revealed that exchange rate volatility negatively impacts productivity in Nigeria in the short run and in the long run. However, the financial development in Nigeria negatively impacts productivity, reflecting the underdevelopment of the financial system to transmit its function to the real sector.  Other variables considered emphasise persistence in the way they impact productivity. The article also emphasised the need for the harmonisation of foreign exchange management guidelines and clarity and transparency in the management of the foreign exchange market.

Keywords: Exchange rate volatility, productivity, financial development, ARDL, economic growth, economic globalization

How to Cite

Orisdare, Monica A., and Sodik Olofin. 2024. “Exchange Rate Volatility and Productivity in Nigeria: An Empirical Analysis”. Asian Journal of Economics, Business and Accounting 24 (6):240-50.


Download data is not yet available.


Cravino J. Exchange rates, aggregate productivity and the currency of invoicing of international trade. In Working Paper; 2017.

Eklou K. Dollar exchange rate volatility and productivity growth in emerging markets: Evidence from Firm Level Data; 2023. Available at SSRN 4484773

Oseni IO, Adekunle IA, Alabi MO. Exchange rate volatility and industrial output growth in Nigeria. Journal of Economics and Management. 2019;38(4):129-156.

Aghion P, Bacchetta P, Ranciere R, Rogoff K. Exchange rate volatility and productivity growth: The role of financial development. Journal of Monetary Economics. 2009;56(4):494-513.

Oloyede JA, Fapetu O. Effect of exchange rate volatility on economic growth in Nigeria (1986-2014). Afro-Asian Journal of Finance and Accounting. 2018;8(4):404–412.

Ehikioya BI. The impact of exchange rate volatility on the Nigerian economic growth: An empirical investigation. Journal of Economics and Management. 2019;37(3):45-68.

Omoregie OK, Olofin S. Corporate performance in Nigeria: The effect of oil price and exchange rate fluctuations. International Journal of Economics and Financial Issues. 2020; 10(1):170-179.

Amor TH, Nouira R, Rault C, Sova AD. Real exchange rate misalignments and economic growth in Tunisia: New evidence from a threshold analysis of asymmetric adjustments. The Quarterly Review of Economics and Finance. 2023;88:215-227.

Avdjiev S, Bruno V, Koch C, Shin HS. The dollar exchange rate as a global risk factor: Evidence from investment. IMF Economic Review. 2019;67(1):151–173.

Adeniyi AP, Olasunkanmi AO. Impact of exchange rate volatility on economic growth in Nigeria (1980-2016). International Journal of Management Studies and Social Science Research. 2019;1(4):6-14.

Ayobami OT. Exchange rate volatility and the performance of manufacturing sector in Nigeria (1981–2016). African Journal of Economic Review. 2019;7(2):27-41.

Kenny SV. Manufacturing sector performance, exchange rate volatility and inclusive growth in Nigeria (1981-2015); 2019.

Moses TK, Victor OU, Uwawunkonye EG, Fumilade OS, Nathaniel G. Does exchange rate volatility affect economic growth in Nigeria. International Journal of Economics and Finance. 2020;12(7):1-54.

Comfort AB. The impact of exchange rate volatility on economic growth in Nigeria: A dynamic econometric approach. African Journal of Business and Economic Development; 2021. ISSN, 2782, 7658

Central Bank of Nigeria (2024) 2022 Statistical Bulletin - Real Sector. Available:

National Bureau of Statistics (2024). Nigeria Gross Domestic Product Q4 2023 Available:

Jiang C, Wu F, Yan H. Exchange rate appreciations and the distribution of productivity: Is importing inputs sustainable for emerging countries? Sustainability. 2022;14(22):15005.

Ahangari A, Hasanpour S. The effect of real exchange rate volatility on productivity growth in Iran with the role of financial development. Growth. 2023;1:2.

Jacob OD. Effect of Foreign Exchange Rate Volatility on Industrial Productivity in Nigeria, 1981-2015; 2019.

Kim YE, Loayza N. Productivity growth: Patterns and determinants across the world. World Bank Policy Research Working Paper. 2019;8852.

Iqbal J, Mahmood F, Nosheen M, Wohar M. The asymmetric impact of exchange rate misalignment on economic growth of India: An application of Hodrick–Prescott filter technique. Economic Analysis and Policy. 2023;77: 809-823.

Abbasi GA, Iqbal DJ. The asymmetric impact of RER-Misalignment on economic growth: An application of Hodrick–Prescott filter technique. The Singapore Economic Review. 2021;1-29.

Jehan Z, Irshad I. Exchange rate misalignment and economic growth in Pakistan: The role of financial development. The Pakistan Development Review. 2020;81-99.

Rashid A, Khan A, Fraz A. Effects of export orientation, exchange rates and leverage on firm productivity: Evidhence from Pakistan. Global Business Review, 09721509211056480; 2021.

Ramoni-Perazzi J, Romero H. Exchange rate volatility, corruption, and economic growth. Heliyon. 2022;8(12).

Rapetti M. The real exchange rate and economic growth: A survey. Journal of Globalization and Development. 2020;11(2):20190024.

Jayathilaka R, Rathnayake R, Jayathilake B, Dharmasena T, Bodinayake D, Kathriarachchi D. Exploring the growth direction: The impact of exchange rate and purchasing managers index on economic growth in Sri Lanka. Quality and Quantity. 2023;57(3):2687-2703.

Nwachukwu NE, Adebayo RO, Shettima AM, Anigwe JO, Udechukwu-Peterclaver CT. Real effective exchange rate misalignment in Nigeria. CBN Journal of Applied Statistics. 2016;7(1):71-91.

Mao R, Yao Y, Zou J. Productivity growth, fixed exchange rates, and export-led growth. China Economic Review. 2019;56:101311.

Mahraddika W. Real exchange rate misalignments in developing countries: The role of exchange rate flexibility and capital account openness. International Economics. 2020;163:1-24.

Del Carmen Ramos-Herrera M, Sosvilla-Rivero S. Economic growth and deviations from the equilibrium exchange rate. International Review of Economics and Finance. 2023;86:764-786.

Ribeiro RS, McCombie JS, Lima GT. Does real exchange rate undervaluation really promote economic growth? Structural Change and Economic Dynamics. 2020;52:408-417.

Shevchuk V, Kopych R. Exchange rate volatility, currency misalignment, and risk of recession in the central and eastern European countries. Risks. 2021;9(5): 82.

Guzman M, Ocampo JA, Stiglitz JE. Real exchange rate policies for economic development. World Development. 2018;110:51-62.

Tochkov K. Regional real exchange rates and growth: Evidence from resource‐based regional economies. Review of International Economics. 2021;29(3): 626-640.

Dickey DA, Fuller WA. Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica: Journal of the Econometric Society. 1981;1057-1072.

Phillips PC, Perron P. Testing for a unit root in time series regression. Biometrika. 1988;75(2):335-346.

Johansen, Søren. "Statistical analysis of cointegration vectors." Journal of economic dynamics and control 12, no. 2-3 (1988): 231-254.

Pesaran MH, Shin Y. An autoregressive distributed lag modelling approach to cointegration analysis . Cambridge, UK: Department of Applied Economics, University of Cambridge. 1995;9514.

Arize AC. A convenient method for the estimation of ARDL parameters and test statistics: USA trade balance and real effective exchange rate relation. International Review of Economics and Finance. 2017;50:75–84.

Pesaran MH, Shin Y, Smith RJ. Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics. 2001;16(3):289-326.