IMPACT OF EXCHANGE RATE ON BALANCE OF PAYMENT IN NIGERIAN (1982-2020)

ABSTRACT Exchange rate is the price of one currency in terms of another currency. Exchange rate s Thisexchange rate is also used to determine the level of output growth of the country. Over theyears, Nigeria has adopted various exchange rate regime ranging research work is centeredonthe impact of exchange rate on the Nigeria economic growth with special emphasis onthepurchasing power of the average Nigeria and the level of international trade transaction. Todothis, the classical linear regression model is applied and the ordinary least square econometrictechnique is also used to estimate the impact of exchange rate on economic growth. Thevariables used are GDP and non-oil export as the dependent variables, real exchangeratesinterest rates, inflation rate and degree of trade openness as the independent variables. Economic test shows the a priori criteria of the parameters used to determine if it conformstothe economic theory. The statistical criteria employed are the F test, T-test and R2 whichtest the significance of the parameters. The econometric (second order test) used are the DurbinWatson test, which test for autocorrelation and the randomness of the residuals. The Jarque-Bera criteria is used to test for normality of the residuals .the multicollinearity test whichisused to test for a perfect linear relationship among the explanatory variables. Fromtheanalysis of the result, it shows that there is a relationship between GDP, EXPTandreal exchange rate in Nigeria. Exchange rate stability has a positive and significant af ectionexport and growth. An increase in exchange rate stability motivate firms to invest in export basedindustries.