The prevalent issue of volatility of exchange rate and dearth of foreign direct investment among businesses necessitated this study. Thus, this research study extensively investigated exchange rate on foreign direct investment in Nigeria 1981-2018. The study adopted secondary time series data obtained, from Central Bank of Nigeria and federal office of statistics. Diagnostic test was conducted to ensure that the models are in line with basic econometric assumptions. Unit Root Test, stationarity test, multi-collinearity, Co-integration Relationship, Error Correction Model (ECM) were applied to avoid spurious result. The granger causality test was applied to examine the effect of the independent variable on the dependent variable. The findings revealed that both real exchange rate and nominal exchange rate are positively related with foreign direct investment. The study recommends that the CBN should ensure adequate flow of forex in the foreign exchange market and ensure a sustained/stable exchange rate level which will serve as attraction of foreign investors for increased inflow of foreign direct investment.
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In-Text Citation: (Okonkwo et al., 2021)
To Cite this Article: Okonkwo, J. J., Osakwe, C. I., & Nwadibe, E. C. (2021). Exchange Rate and Foreign Direct Investment in Nigeria 1981-2018. International Journal of Academic Research in Business and Social Sciences, 11(1), 213–232.
