EFFECT OF REAL EFFECTIVE EXCHANGE RATE ON EXPORT OF GOODS AND SERVICES IN NIGERIA

Abstract

This paper assessed the influence of real effective exchange rate on export of goods and services in Nigeria over the period, 1986-2020. The Error correction model estimation was applied in estimating the multiple regression model. The findings showed that the real effective exchange rate is positive and statistically significant effect on the exports of goods and services in Nigeria. Expectedly, the convergence coefficient or error correction term (ECT) is negatively signed and significant, which suggests that last-period’s deviation from a long-run equilibrium influences its short-run dynamics as is being corrected at a speed revealed by the parameter estimate. Thus, the speed of adjustment (or error correction term) shows that deviation from equilibrium relationship is corrected at the speed of 59% on annual basis. We recommend that Nigeria need to focus on the variable to use in improving their economy via trade. if the region wishes to improve its economy by focusing on exports, the currencies should be revalued/appreciated, as export has a positive link with the actual exchange rate, and depreciation will result in revenue loss.