An Emprical Analysis Of the Impact of Exchange Rate Dynamics On Manufacturing Output In Nigeria

Abstract This study revealed an empirical analysis of the impact of exchange rate dynamics on manufacturing output in Nigeria and how it affects growth in various global locations has been the subject of many studies. These studies have looked into the relationship between macroeconomic performance and exchange rate fluctuations in relation to manufacturing output and other related variables. Using Error Correction Model and exchange rates, inflation rates, interest rates, and investments as independent variables, this study examined the performance of Nigeria's manufacturing sector as was affected by fluctuations in exchange rates policy, Stationarity, short-term and long-term causal relationships-among the variables were tested using the Unit Root, Johansen co-integration, Granger causality tests. According to the study's empirical findings, interest rates, exchange rates, and investment all have statistically significant effects on Nigeria's manufacturing output; however, investment positively and significantly affects Nigerian manufacturing output, while interest rates and exchange rates have negative effects. Additionally, the estimation's outcome showed a two-way causal relationship between Nigeria's manufacturing output and exchange rates. Therefore, in order to successfully manage the exchange rate, it is suggested that the government develop a good exchange rate policy in to their economy system.