Project Topic:

EXCHANGE RATE FLUCTUATION AND EXPORT PERFORMANCE IN NIGERIA

Project Information:

 Format: MS WORD ::   Chapters: 1 - 5 ::   Pages: 65 ::   Attributes: Questionnaire, Data Analysis, Abstract  ::   1,272 people found this useful

Project Department:

ACCOUNTING UNDERGRADUATE PROJECT TOPICS, RESEARCH WORKS AND MATERIALS

Project Body:

ABSTRACT

This paper “exchange rate fluctuation and export performances in Nigeria” aim to determine the effect of foreign exchange dynamism on the country’s export performance from 1961-2011. Research results from the economic tool of regression analysis obtained shows that fluctuations in the naira exchange rate affect manufacturing and agricultural exports more than it affects oil export. To reduce the impact of this fluctuations on these export, monetary authorities in Nigeria should stabilize the naira exchange rate through monetary and fiscal policies, exporters should take advantage of the futures worked to eliminate the negative effects of this fluctuations on export income and performance, and fiscal and monetary policies should be initiated by the government to increase local production to meet local consumption, reducing foreign exchange demand for import consumption and reduce pressure on the naira exchange rate.

CHAPTER ONE

1.0            BACKGROUND OF THE STUDY

Exchange rate is a prominent determinant of world trade, receiving much attention in the context of global imbalances. The subject of exchange rate fluctuation came to be a topical issue in Nigeria because it is the goal of every economy to have a stable rate of exchange with its trading partners. In Nigeria, this goal was not realized in spite of the fact that they embarked on the devaluation of the naira and adopted the Structural Adjustment Program (SAP) in 1986. The failure to realize this goal subjected the Nigerian manufacturing sector to the challenge of a constantly fluctuating exchange rate.

One objective of the SAP was the restructuring of the production base of the economy with a positive bias for the production of agricultural export. The foreign exchange reforms that facilitated a cumulative depreciation of the effective exchange rate were expected to increase the domestic prices of agricultural exports and hence boost domestic production.

Empirically many researchers like Oyejide (1986), Ihimodu (1993) and World Bank (1994) analyzed the effects of cumulative depreciation of the effective exchange rate, as it resulted in the change in the structure and value of Nigeria’s exports. The depreciation increased the prices of agricultural exports and the result indicated a worked increase in the volume of agricultural exports over the years. However, very little achievements were made in stabilizing the rate exchange. As a consequence, the problem of exchange rate fluctuations in Nigeria

persists up till date.

Fluctuation is a major constraint on development of an economy, making planning more problematic and investment more risky. For instance, fluctuation in exchange rate may reduce the activities of potential investors in Nigeria because it increases uncertainty over the returns of a given investment. Potential investors will invest in a foreign location only if the expected returns are high enough to cover for the currency risk (Gerado, 2002).  Risk in international commodity trade usually arises from two main sources; changes in world prices or fluctuation in exchange rate. Therefore, understanding the behavior of the exchange rate is very important for many reasons. First, the relationship between a country’s exchange rate and economic growth via trade is a crucial issue from both the descriptive and policy prescription perspective. As Edwards (1994; 61) asserts; “it is not an overstatement to say that the issue of real exchange rate behavior now occupies a central rate in policy evaluation and design”. A country’s exchange rate behavior is an important determinant of the growth rate of its exports and it serves as a measure of its international competitiveness (Bath and Amusa, 2003), Chukwu (2007)observed the instability exchange rate as a determinant of trade in Nigeria; having a positive influence on export trade and at other times a negative influence. This suggests an erratic change in its value having a long-run effect on export and economic growth. This research aims to determine the impact of fluctuations in the naira exchange rate on Nigerian’s export performance.

1.1 STATEMENT OF THE PROBLEM

Despite the existence of literature on the influence of exchange rate fluctuations on exports in Nigeria, theoretical and empirical works on the subject are yet to produce a consensus. The two major trends in the literature review indicate thus; the first argues that exchange rate fluctuations represent uncertainty and will impose costs on risk- adverse economic agents which as a result respond by favoring domestic- foreign trade just at the margin. In other words, it might hamper the growth of international trade (Chowdhury, 1993, Cushiman, 1983, 1988 Kenen and Rodrik, 1986). The second strand of literature argues that if the economic agents are sufficiently risk lovers, an increase in exchange rate raises the expected marginal utility of export revenue and thus induces them to increase their exports in order to maximize their revenue. Therefore, exchange rate fluctuations may actually catalyze trade flows (De Grauwe:

1988, IMF: 1984, Klein: 1990 and Chambers, R. G. and Just, R. E. (1991). Only few attempts have been made to examine them for developing countries, Nigeria inclusive because of the lack of reliable time –series data. The available instances include Vergil (2002) for turkey and Bah and

AMUSA (2003) and Takendesa, (2005) for South Africa, Ajayi (1988), Adubi, A. A. and Okunmadewa, F. (1999), Osagie (1985) for Nigeria.

The research will differ from the existing ones as it will carefully examine exchange rate fluctuations and export for both the oil sector and non-oil sectors. Previous studies assessed only the influence of exchange rate fluctuation on either oil export, neglecting the non-oil export or on non-oil export alone excluding the oil export. They failed to ascertain its effect on both the oil and non-oil (like agricultural and manufacturing) sectors export. Analyzing only oil exports or non-oil exports exclusively may not really give a value judgment and conclusion on the effect of exchange rate fluctuations and export performances in Nigeria. Furthermore, the study will provide deep insight into the relationship existing between exchange rate fluctuations and exports by adopting a popular econometric methodology for a measure of fluctuations which is Generalized Autoregressive Conditional Heteroscedasticity (GARCH) modeling technique, which was not used by some of the previous studies.

In view of the above problem, the following research questions are raised:

1.     How does oil export respond to exchange rate fluctuation?

2.     How does manufacturing export respond to exchange rate

fluctuation?

3.     How         does   agricultural export            respond        to        exchange      rate

fluctuation?

1.2 OBJECTIVES OF THE STUDY

The broad objective of the study is to determine impact of exchange rate fluctuations on export performance in Nigeria. Specifically, the study addresses the following objectives:

1.     To trace how oil export respond to exchange rate fluctuation.

2.     To trace how manufacturing export respond to exchange rate fluctuations.

3.     To trace how agricultural export respond to exchange rate fluctuation.

1.3 SIGNIFICANCE OF THE STUDY

 This research will serve as a future guide to the policy makers in the formulation of better and efficient policy options for managing exchange rate fluctuations in Nigeria. Also, the research will be of immense help to the general economy, as it will provide possible measures the monetary authority could adopt in order to maintain exchange rate stability so that exchange rate can influence importantly export growth, consumption, resource allocation, employment and private and foreign investments as research has shown. Above all, it will add to the existing literature thus, providing relevant information that could guide further researchers on this subject.

1.4 SCOPE OR DELIMITATION OF THE STUDY

 This study intends to look at the export performances and

exchange rate fluctuations in Nigeria. Thus, it is restricted to tracing the responses of some export components to shock to the exchange rate over some periods; hence it omitted the test of hypothesis. The study covers a period of 51 years that is 1961-2011. This range is chosen to give room for enough degree of freedom that will ensure reliable estimates.

Get the complete project »


Instant Share On Social Media:


Can't find what you are looking for?
Call (+234) 07030248044.

OTHER SIMILAR ACCOUNTING PROJECTS AND MATERIALS

AN APPRAISAL OF THE IMPLICATION OF ELECTRONIC BANKING IN NIGERIA BANKS (A CASE STUDY OF ACCESS BANK)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 67 ::   Attributes: Secondary data, Data Analysis,Abstract  ::   27548 engagements

CHAPTER TWO REVIEW OF RELATED LITERATURE Electronic banking in Nigeria has overtime been viewed by many especially economists as having a lot of implications on the economy of Nigeria and especially...Continue reading »

A CRITICAL ANALYSIS OF THE USE OF FINANCIAL STATEMENTS IN ASSESSING THE PERFORMANCE OF AN ORGANIZATION (A CASE STUDY OF FIRST BANK NIGERIA)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 75 ::   Attributes: Questionnaire, Data Analysis, Abstract  ::   25566 engagements

ABSTRACT The study was carried out to analyse how an organization performs making use of the financial statements with First Bank of Nigeria Plc serving as the case study. the study disclosed that th...Continue reading »

AN EVALUATION OF THE PERFORMANCE OF NIGERIAN STOCK EXCHANGE IN THE ECONOMIC DEVELOPMENT OF NIGERIA ( A CASE STUDY OF NIGERIAN STOCK EXCHANGE)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 78 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   12453 engagements

HISTORICAL BACKGROUND OF THE NIGERIA STOCK EXCHANGE IN THE ECONOMIC DEVELOPMENT OF NIGERIAN. The nigeria stock excahnge denoted by NSE is a government establishment where stocks are traded on a daill...Continue reading »

APPLICATION OF BUDGETS AND BUDGETARY CONTROL MEASURES IN A NON-PROFIT ORGANIZATION: A CASE STUDY OF APOSTOLIC CHURCH, DELTA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 76 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   17532 engagements

2.1 CONCEPTUAL FRAMEWORK A budget is can be defined by accountants as “a planned outcome to be generated and for the expenditure to ensure during that period and the capital to be employed to a...Continue reading »

ASSESSING BOOK-KEEPING PRACTICES OF SMALL AND MEDIUM SCALE ENTERPRISES IN CALABAR LOCAL GOVERNMENT AREA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 69 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   16115 engagements

ABSTRACT The economy of Nigeria cannot function properly or thrive without the micro, small and medium scale enterprises (SMEs). These small scale enterprises cannot function properly if they are not ...Continue reading »

ASSESSMENT OF ADEQUATE RISK RECOGNITION AND MANAGEMENT IN NIGERIAN INSURANCE COMPANIES (A CASE STUDY OF UNION ASSURANCE COMPANY, UYO)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 86 ::   Attributes: Questionnaire, Data Analysis  ::   10161 engagements

THE CONCEPT OF RISK Risk has been the subject of study by different scholars over the years with several meaning and definitions. But the most accepted definitions are that of J.E Banister and P.A Baw...Continue reading »

What are looking for today?

WHAT OUR CUSTOMERS ARE SAYING:
  • 1. Haruna Usman Lame from Abubakar Tafawa Balewa University Bauchi said "I really enjoyed using this website am so grateful ".
    Rating: Excellent
  • 2. Bagu Manjing Dakan from polytecnic barkin ladi said "the use of information and communication technology in teaching of vocational subjects in plateau state polytecnic ".
    Rating: Excellent
  • 3. Ekeh Miracle from kaduna state University said "Toopnotch delivery from this crew I highly recommend everyyone to patronise them".
    Rating: Very Good
  • 4. Joseph from feck said "Bravo".
    Rating: Excellent
  • 5. JACOB from NASARAWA STATE UNIVERSITY, KEFFI said "I had a wonderful experience using ProjectClue, they delivered not only on time, but the content had good qualty. I recommend ProjectClue for any project research work.".
    Rating: Excellent
  • 6. Ibhadam Adam H from Bayero University, Kano said "Projectclue are really good and I have enjoyed their services.".
    Rating: Very Good