IMPACT OF MONETARY POLICY ON FOREIGN TRADE IN NIGERIA

Background: The study was carried out to examine the cause-effect relationship between monetary policy and foreign trade in Nigeria between 1981 and 2023. Objectives: the study were to determine the impact of exchange rate, money supply (M2) monetary policy rate, credit to private sector on foreign trade. Methods: The study adopted Descriptive statistics, Co-integration, Unit root test and Autoregressive Distributed Lag (ARDL) method of analysis. The data used for this study were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin and World Bank Development Indicators. Pre-estimation tests were
carried out on each of the variables using Augmented Dickey Fuller (ADF) unit root test to avoid spurious regression results. The cointegration test result showed that long-run equilibrium relationship exists between monetary policy and foreign trade in Nigeria. The empirical analysis was conducted using the methodology of Error Correction Model (ECM) approach.