Exchange Rate Fluctuations and Imported Capital in Nigeria

Abstract

This study investigated the effect of exchange rate fluctuations on imported capital in Nigeria. The study used quarterly time series data obtained from the Central Bank of Nigeria (CBN) statistical bulletin for the period 2010 to 2020. Autoregressive Distributed Lag (ADRL) was adopted for the analysis of data. The result of the study showed that exchange rate movement in Nigeria has a significant negative effect of the value of imported capital during the period of analysis. The study further revealed that interest rate and the value of imports has positive effect on imported capital. However, only interest rate has significant effect on imported capital. The study therefore, recommended that foreign exchange should only be approved for the importation of capital goods and a limited percentage for essential goods not produced in Nigeria.