This study examines the impact of exchange rate fluctuations on economic growth in Nigeria over the period 1985-2024. Specifically, it evaluates the effects of exchange rate, monetary policy rate, and inflation rate on gross domestic product (GDP). The study adopts a quantitative ex-post facto research design, utilizing secondary time series data sourced from the Central Bank of Nigeria, World Bank, and International Monetary Fund. The Autoregressive Distributed Lag (ARDL) model is employed to estimate both short-run and long-run relationships among the variables, following unit root testing using the Augmented Dickey-Fuller (ADF) technique. Diagnostic tests, including Breusch-Godfrey serial correlation, Breusch-Pagan-Godfrey heteroskedasticity, Jarque-Bera normality, and Ramsey RESET tests, are conducted to ensure model robustness. Findings reveal that exchange rate and inflation rate exert a positive and statistically significant effect on economic growth in the short run, while monetary policy rate has a negative but insignificant effect on GDP. The study concludes that exchange rate volatility plays a critical role in shaping Nigeria’s economic performance and recommends coordinated monetary and fiscal policies, alongside economic diversification, to enhance stability and sustainable growth.
Keywords: Exchange Rate, Gross Domestic Product, Inflation, Monetary Policy Rate., economic growth
