Unification of Foreign Exchange Markets and Economic Growth

  • Ololade Sikiru ONIYIDE Department of Finance and Banking, University of Port Harcourt, Rivers State, Nigeria
  • Ebere P. IFIONU Department of Finance and Banking, University of Port Harcourt, Rivers State, Nigeria
  • Godfrey O. OMOJEFE Department of Finance and Banking, University of Port Harcourt, Rivers State, Nigeria
Keywords: exchange rate unification, economic growth, Nigeria, policy implications, investor confidence

Abstract

This research study delves into the intricate relationship between exchange rate unification and its implications for economic stability, with a specific focus on the Nigerian context. Exchange rate unification, the process of transitioning from multiple exchange rate systems to a single unified rate, holds the potential to reshape an economy's dynamics, affecting investor confidence, trade balances, and overall macroeconomic stability. Through a comprehensive examination of pre-unification and post-unification exchange rate data and gross domestic product data, this research uncovers patterns in currency valuation, volatility, and investor sentiment. The study employed secondary data gotten from the Central Bank of Nigeria statistical bulletin. The study explores the changes in the mean and variability of exchange rates, highlighting shifts in currency dynamics after the unification process. The study found that there are variations in the pre and post-unification era which has economic effect potentials. Also, the study evaluated the quarterly trend of GDP from the first quarter of 2022 to the first quarter of 2023. The result exhibits a mixed trend across various sectors, with the influence of the exchange rate unification potentially being a key driver in shaping these trends in 2023. The impact of unification on currency stabilization, international trade, and investor confidence may have contributed to the overall growth trend. The study recommends renewed exchange rate management strategies, investor communication approaches, export diversification tactics, fiscal resilience planning, and risk management techniques for businesses.

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Published
2024-01-31
How to Cite
Ololade Sikiru ONIYIDE, Ebere P. IFIONU, & Godfrey O. OMOJEFE. (2024). Unification of Foreign Exchange Markets and Economic Growth. International Journal on Economics, Finance and Sustainable Development, 6(1), 115-129. Retrieved from https://journals.researchparks.org/index.php/IJEFSD/article/view/5194
Issue
Vol. 6 No. 1 (2024): January
Section
Articles