THE IMPACT OF EXCHANGE RATE ON BALANCE OF PAYMENTS

Author: Patrick, Ologbenla (PhD)

ABSTRACT

The purpose of this study is to look at the relationship between the exchange rate and the balance of payments. The article is divided into five chapters: chapter 1 offers a fundamental overview of the subject, chapter 2 gives a summary of the pertinent literature, and chapter 3 describes the technique in more detail. The ordinary least square regression (ols) technique will be used to assess the R-squared test (explanatory power of the variables), the economic apriori criteria, and the D.W test, which is the econometric criterion for testing for the presence of an auto-regressive scheme. The result the impacts of the exchange rate on the nation’s balance of payment can be described to be weak and negative (β = -0.0518 p = 0.041, where p < 0.05). The researcher hereby rejects the null hypothesis to accept the alternate hypothesis which states that there is a weak negative relationship between exchange rate and balance of payment in Nigeria.

Keywords: Exchange rate, Balance of Payments,

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