IMPACT OF EXCHANGE RATE ON BALANCES OF PAYMENT IN NIGERIA

ABSTRACT
This project examines the effect of exchange rate on balance of payment in Nigeria. The broad objective of the study is to ascertain the extent to which exchange rate determines the balance of payment and also to determine the relationship between national income and balance of payment. The problem of foreign exchange inadequacy, dependence on the oil sector for exchange earning, continuous depreciation of the naira exchange rate coupled with the inability to determine precisely the level of exchange rate of the naira that would ensure the internal and external balance simultaneously. The secondary source of data collection was used as data was collected from CBN publications and the Federal Office of Statistics. The ordinary least square regression was used to analyze the data and the findings revealed that the national income has a positive correlation with balance of payment. The unfavourable domestic and international economic development has constrained the achievement of balance and sustained economic growth that could foster balance of payment viability. It was recommended amongst others that there should be increase in non-oil exports commodities.