THE NIGERIAN FOREIGN EXCHANGE MARKET: A CRITICAL EVALUATION OF THE NAIRA EXCHANGE RATE
THE NIGERIAN FOREIGN EXCHANGE MARKET: A CRITICAL EVALUATION OF THE NAIRA EXCHANGE RATE
No Thumbnail Available
Date
1994-10
Authors
AROME, EMMANUEL WADA
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
The Nigerian foreign exchange market as well as the value
of Naira exchange rate to other International Currencies have
caused a lot of concern to warrant academic discussions.
The structural imbalances, distortions and general recession
in the world economy affected Nigeria's external reserve,
balance of payment, Naira exchange rate, external debt, trade
and_export promotions. Inspite of the various exchange rate
regimes operational world over, Nigeria adopted fixed or
administratively controlled exchange rate from 1958 to
September 1986. However, with the operation of SAP from
September 1986 to December 1993, free (floating) market
determined exchange rate was adopted. The management of
foreign exchange market in Nigeria, has left much to be desired.
This is because, Naira witnessed the worst degree of devaluation
among the world currencies since the operation of SAP.
At the expense of Nigerian economy, the paralled market was the
only source for obtaining sizeable volume of foreign currency
at prohibitive costs. This position dealt immensely with the
manufacturing sector which consumed about 60%, but contributes
insignificantly to the source of forex supply.
From the study, demand far outstrips the level of supply or forex
thus creating undue pressures on the value of Naira. The market
forces of free supply and demand of forex could not operate,
to give a realistic exchange rate of Naira during the SAP period,
and_even after. The search for a meaningful exchange rate of
Naira would be inconclusive unless a courageous and stable
v
government at the centre Initiates adequate operating
policies and at the same time monitorstheir implementations
for desired results. The market determined exchange rate
appear to have failed the Nigerian economy. The moderated
purchasing power parity and managed or controlled exchange rate
regime would be adequate as a solution for reasonable Naira
exchange rate .
Description
THESIS SUBMITTED TO THE POSTGRADUATE SCHOOL OF AHMADU BELLO
UNIVERSITY, IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE
AWARD OF DEGREE OF
MASTERS IN BUSINESS ADMINISTRATION (MBA)
DEPARTMENT OF BUSINESS ADMINISTRATION
FACULTY OF ADMINISTRATION
AHMADU BELLO UNIVERSITY
Z A R I A .
OCTOBER, 1994
Keywords
NIGERIAN, FOREIGN EXCHANGE,, CRITICAL,, EVALUATION,, NAIRA EXCHANGE