EHIGIE FREDA ESOSA

The exchange rate is a key macroeconomic factor that affects international trade and the real economy of each country. This study made use of annual data of Nigeria from 1981-2019 to examine the impact of exchange rate volatility on economic growth in Nigeria and the Error Correction Mechanism (ECM) was used to examine the relationship. The study found that the level of foreign direct investment positively and significantly affects economic growth in Nigeria, the level of government expenditure positively and significantly affects economic growth in Nigeria and the level of exchange rate volatility which is the key independent variable in the study was found to have a negative and significant impact on economic growth in Nigeria. The study therefore recommends that in order to regulate the tendencies of exchange rate volatility, The government should diversify the economy as well as increase industrialization and manufacturing activities , which will help reduce the pressure on the currency as the dependency effect would be reduced