Impact of Environmental Factors on Foreign Exchange Fluctuations in Nigeria

International Journal of Economics and Financial Research. ISSN(e): 2411-9407, ISSN(p): 2413-8533 Vol. 3, No. 4, pp: 39-43

5 Pages Posted: 13 Sep 2017

See all articles by Oyınlola M. Akinyede

Oyınlola M. Akinyede

Department of Finance, Redeemers University

Grace Iriobe

Department of Financial Studies, Redeemers University

Taofeek Afolabi

Redeemer's University - Department of Financial Studies

Olanrewaju Eniola

Federal College Of Animal Health And Production Technology

Date Written: December 2, 2016

Abstract

The study tried to examine the effect of environmental forces on foreign exchange market in Nigeria. The PEST- Political variables such as change in government (CIG) and democratic rule (DMR); Economical variables such as interest rate spread (IRS) and inflation in consumer prices (ICP); Social variable like population growth (PGR); and Technological variables such as fuel exports in merchandise (FEM) and technology export (TEX) were used to evaluate the impact these environmental factors have on foreign exchange market (official exchange rate). This study employed a time series data with the time frame 1973-2015. A multiple regression model was developed and analyzed using the ordinary least square method (OLS) with the help of E-views, a statistical package. The result showed that in isolation, IRS, FEM and DMR significantly influenced dealing rates in the Nigerian foreign exchange market while ICP, CIG, PGR, and TEX did not show any significant influence on foreign exchange market in Nigeria. However, the overall result showed a significant positive relationship between the environmental forces and the foreign exchange market in Nigeria with a p -value of 0.000000. We therefore concluded that environmental factors have significant influence on the Nigerian Foreign Exchange market. Hence, we recommended that relevant stake holders should pay proper attention to those environmental factors with significant impact on our Foreign Exchange Market in Nigeria.

Keywords: Change in Government (CIG); Democratic Rule (DMR); Interest Rate Spread (IRS); Inflation in Consumer Prices (ICP); Population Growth (PGR); Fuel Exports in Merchandise (FEM) and Technology Export (TEX)

Suggested Citation

Akinyede, Oyınlola M. and Iriobe, Grace and Afolabi, Taofeek and Eniola, Olanrewaju, Impact of Environmental Factors on Foreign Exchange Fluctuations in Nigeria (December 2, 2016). International Journal of Economics and Financial Research. ISSN(e): 2411-9407, ISSN(p): 2413-8533 Vol. 3, No. 4, pp: 39-43, Available at SSRN: https://ssrn.com/abstract=3035340

Oyınlola M. Akinyede (Contact Author)

Department of Finance, Redeemers University ( email )

Ede, Osun State
Nigeria
+2347069328922 (Phone)

Grace Iriobe

Department of Financial Studies, Redeemers University ( email )

Mowe, Ogun State
Ogun State
Nigeria

Taofeek Afolabi

Redeemer's University - Department of Financial Studies ( email )

Ede, Osun State
Nigeria

Olanrewaju Eniola

Federal College Of Animal Health And Production Technology ( email )

Moor Plantation
Ibadan
Nigeria

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