Impact of Exchange Rate Fluctuation on the Standard of Living in Nigeria

Abstract

The study examined the effect of the exchange rate fluctuations on standard of living in Nigeria. The variables of gross domestic product per capita (GDPPC), per capital income and unemployment proxied standard of living while the explanatory variables were exchange rate (EXCR), Inflation (INF) Interest rate (INTR) and money supply secondary data was used covering between the period of 1990-2023. Unit root test were carried out to ascertain the stationarity of the variables the result of which Autoregressive Distributed Lag (ARDL) was used to estimate the parameters as they were integrated in the order of 0 and 1. The findings reveal that Exchange rate fluctuation has a significant long and short run relationship with the gross domestic product (GDP) per capita, per capita income and unemployment rate in Nigeria. The implication of this is that living standard in Nigeria is greatly influenced by the alterations in exchange rate. As such the study recommended amongst other things that Government should improve on the productive sector of the economy as the primary sector of the economy that produces the basic commodities used to produce goods and services thereby reducing unemployment and improving standard of living. They should strive to put in place positive economic reforms tailored towards enhancing the economic performance and reducing unfavorable impact of exchange rate fluctuations on the standard of living in Nigeria.