Foreign Direct Investment (FDI) remains an important source of capital for developing economies, yet Nigeria continues to experience unstable inflows due to macroeconomic fragility. This study evaluates the influence of exchange rate (EXR), gross domestic product (GDP), and stock market returns (SMR) on FDI using quarterly data spanning 2000–2024. The Autoregressive Distributed Lag (ARDL) model was employed to capture both dynamic and equilibrium relationships. Results indicate that in the long run, EXR exerts a significant negative influence on FDI (β = -0.274, p = 0.013), while GDP (β = 0.167, p = 0.016) and SMR (β = 0.085, p = 0.002) show positive and significant effects. Short-run dynamics mirror these outcomes, with the error correction term (ECM = -0.482, p < 0.001) confirming a 48.2 percent quarterly adjustment toward equilibrium. The study concludes that macroeconomic instability, especially exchange rate volatility, undermines Nigeria’s investment climate. It recommends sustained exchange rate stability, inclusive growth strategies, and strengthened capital market infrastructure to enhance investor confidence.
Keywords: Exchange Rate Volatility, Foreign Direct Investment, ardl model, economic growth, stock market performance.
