ASSESSING THE NEXUS BETWEEN MONETARY POLICY (INTEREST RATE) AND EXCHANGE RATE ON THE ECONOMIC GROWTH IN NIGERIA (2000-2022)

This study assessing the nexus between monetary policy (Interest rate) and exchange rate on the economic growth in Nigeria using time series data over the period of 2000-2022. The objectives of the study are: to examine the effect of exchange rate on economic growth of Nigeria, determine the effect of interest rate on economic growth of Nigeria and evaluate effect of inflation rate on economic growth of Nigeria. The study adopted the econometric technique of Ordinary Least Squares (OLS). The Augmented Dickey Fuller test was used in the study to check for unit root. The study revealed that exchange rate (EXR) has a positive relationship with economic growth. The figure stood at 336.6555, which means that a unit increase in EXR, will lead to 336.655 increase in gross domestic product in Nigeria within the period under study, Interest rate (INTR) has a negative relationship with gross domestic product, it did not conform with apriori expectations. The figure stood at -2292.098, which means that a unit decrease in interest rate, will lead to 2292.098 decrease in gross domestic product in Nigeria within the period under study and Inflation rate (INFR) has a positive relationship with gross domestic product, it did not conform with apriori expectations. The figure stood at 103.5632, which means that a unit increase in inflation rate, will lead to 103.5632 increase in gross domestic product in Nigeria within the period under study, the result shows that there is the absence of autocorrelation problem in the model as the computed Durbin-Watson statistics does not fall with the zero autocorrelation regions. The study recommended that recapitalization is good for Nigerian banking sector and the banking sector must be able to retain earnings and invest them in business ventures that, in turn, can generate more earnings, once more earnings are generated it will have positive effect on the economy in respect to paying actual tax which government can use for infrastructural development. The study recommended that Strengthen Exchange Rate Policies: Given the positive relationship between the exchange rate (EXR) and gross domestic product (GDP), policymakers should prioritize the stabilization and strengthening of the exchange rate, reassess Interest Rate Strategies: The unexpected negative relationship between interest rates (INTR) and GDP suggests a need for a thorough reassessment of current interest rate policies and analyze Inflation Dynamics: The positive association between inflation rate (INFR) and GDP, despite not conforming to a priori expectations, indicates that inflation's effects are complex and multifaceted.