Effect of Exchange Rate Fluctuations on Non-Oil Exports in Nigeria

By: Ihugba Okezie A., Ihezukwu, Adaku V., Ndukwe-Ani, Pamela A., & Ikechukwu Precious C.

Pages: 1–20, Volume: 3, Number: 2

Published by: AEFUNAI Journal of Economics, Finance and Development Studies, Alex Ekwueme Federal University, Ndufu-Alike, 8/1/2026, 2026

ISSN (Electronic): 2536-6742

DOI:

Effect of Exchange Rate Fluctuations on Non-Oil Exports in Nigeria

Abstract:

This study examines the impact of exchange rate movements and volatility on non-oil export performance in Nigeria using the Autoregressive Distributed Lag (ARDL) model with annual data from 1981–2024. The analysis includes inflation, interest rate, trade openness, and gross domestic product (GDP) as control variables to capture both short-run and long-run relationships. The ARDL bounds test confirms the existence of a long-run relationship among the variables. The findings indicate that exchange rate movements exert a mixed and largely insignificant effect on non-oil exports in both the short and long run, implying that exchange rate depreciation alone is insufficient to stimulate export growth. Exchange rate volatility also exhibits weak and inconsistent effects. Conversely, trade openness and GDP have significant positive effects on non-oil exports, underscoring the importance of economic growth and global market integration. Inflation and interest rates show mixed effects, reflecting the complexity of the macroeconomic environment. The error correction term is negative and statistically significant, indicating convergence to long-run equilibrium at a moderate speed of adjustment. The study concludes that structural factors are more influential than exchange rate adjustments in driving non-oil export performance. It recommends strengthening productive capacity, expanding trade openness, and maintaining macroeconomic stability to promote export diversification and sustainable economic growth.

Keywords: Foreign Exchange, Inflation, Trade Policy, International Economics, ARDL