Publisher: Centre For Social Science Research, Enugu

The Impact of Real Exchange Rate Fluctuation On Industrial Output In Nigeria

Jongbo, Olajide Clement
KEYWORDS: Exchange rate fluctuation, industrial output, Nigeria

ABSTRACT:

The low productivity and increasing trend of under utilization of resources capacity experience in the industrial sector in Nigeria have been largely attributed to a misalignment in the real exchange rate and some other economic factors, such as, available foreign exchange. The economic literature maintains that exchange rate over valuation arises from unsustainable macroeconomic policies such as, restriction of trade, transfer of modern technology; and so on. It was partly in response to this challenge posed by exchange rate misalignment and the consequent declining output experience in the industrial sector that the CBN adopted a number of macro economics measures to reposition the Nigeria economy on the path of sustainable growth. This study, the impact of real exchange rate fluctuation on industrial output investigates the effect of misalignment of real exchange rate on the output of the Nigeria industrial sector. The results show that real exchange rate play a significant role in determining the industrial output and also in addition, availability of foreign exchange increase through contentious export drive from both oil and non-oil products will contribute tremendously to increase industrial output. The study further reveals that the capacity utilization ratio is low the cases of which may not be too far away from, partly epileptic power supply, lack of adequate and appropriate technology and so on and also that the impact in bidirectional (real exchange rate in industrial output and vis-versa).



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