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EXCHANGE RATE VOLATILITY AND NON-OIL EXPORTS IN NIGERIA: 1986-2008
Abstract
The paper investigates the impact of exchange rate volatility on non-oil exports in Nigeria, 1986(1)–2008(4). The paper conirms the existence of statistically signiicant relationship between real exports and exchange rate volatility. The results show that exchange rate, exchange rate volatility and foreign income have signiicant positive effects on non-oil exports in the long run. Imports, on the other hand, have a statistically negative effect on exports in the long run. The ECM results show that lagged foreign income has significant positive effect on non-oil exports. The coefficient of imports is positive supporting the import compression hypothesis in the short run. The results show that short run impact of the exchange rate volatility is statistically insignificant. The positive coeficient of the exchange rate variable (though not signiicant) suggests that an appreciable depreciation of the exchange rate could lead to increase in non-oil exports in Nigeria. Essentially, the results suggest that the exchange rate volatility is only effective in the long run but not in the short run in the case of Nigeria.
Key words: Exchange rate volatility; Exports; Error correction; Nigeria