IMPACT OF FOREIGN EXCHANGE RATE FLUCTUATIONS ON CORPORATE PROFITABILITY:A Case Study of Nigerian Companies

This study examined the relationship between foreign exchange rate fluctuations and corporate profitability using panel data of thirteen commercial banks listed on the Nigeria Exchange Group for the period 2018– 2022. The variables considered were corporate profitability proxied by return on capital employed and return on assets, exchange rate, inflation rate and interest rate. The study carried out a histogram normality test, Breusch-Pagan-Godfrey test of heteroskedasticity, Ramsey RESET model specification test, Serial correlation test, correlation analysis and regression analysis. The F-statistics indicated that all the explanatory variables taken together are statistically significant. The regression result revealed that exchange rate has a positive and statistically insignificant relationship with return on capital employed and return on assets. The study recommended that government should formulate policies that will be very consistent in controlling exchange rate fluctuations and interest rate should be controlled by the government to encourage firms to source external capital for their expansion.