Exchange Rate Volatility, Macroeconomic Instability and Foreign Portfolio Investment in Nigeria
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Abstract
This study examines the effect of exchange rate volatility and macroeconomic variable instability on foreign portfolio investment in Nigeria. The data for this study was collected from World Bank Economic Indicator database and the Nigerian Security and Exchange commission Statistical Bulletin covering 1981 to 2024. The longitudinal research design was adopted by this study. The dynamic least sqaures regression technique was utiized and the E-view 9.0 econometric software was used for the
analysis. This study found that exchange rate volatility, growth in gross domestic product negatively and signficantly affect forign portfolio investement, while inflation rate and interest rate positively and significantly infleunce forign portfolio investement. The study recommend among others that the Nigerian government, particularly the Central Bank of Nigeria should intensify effort gear towards stabilizing exchange rate; and that government should deepen current reforms directed at reducing general price level (inflation), as doing so will stimulate foreign portfolio investment inflows into the country
analysis. This study found that exchange rate volatility, growth in gross domestic product negatively and signficantly affect forign portfolio investement, while inflation rate and interest rate positively and significantly infleunce forign portfolio investement. The study recommend among others that the Nigerian government, particularly the Central Bank of Nigeria should intensify effort gear towards stabilizing exchange rate; and that government should deepen current reforms directed at reducing general price level (inflation), as doing so will stimulate foreign portfolio investment inflows into the country
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