Effects of Exchange Rate Volatility on the Nigerian Stock Market Performance
By Lajems Economics
EFFECTS OF EXCHANGE RATE VOLATILITY ON THE NIGERIAN STOCK MARKET PERFORMANCE
Idris Ahmed Sani
Dept. of Economics, Kogi State University Anyigba, Nigeria.
Corresponding author: firstname.lastname@example.org
This study assessed the effects of exchange rate volatility on the Nigeria Stock Exchange performance. The study used Generalized Autoregressive Conditional Heteroskedasticity (GARCH) model to examine the relationship between exchange rate volatility and the Nigeria stock market performance. The study employed monthly Nigeria data for the period 2005 – 2015. The study finds a very weak relationship between exchange rate volatility and the stock market performance. Surprisingly, US interest rates were found to have a positive impact on Market capitalization. Prime overdraft rate and total crude oil mining production were found to have negative impact on stock market capitalization. The study recommended that, since the Nigeria stock market is not really exposed to the negative effects of exchange rate volatility, government can use exchange rate as a policy tool to woo in foreign portfolio investment since the negative relationship is weak and insignificant.
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