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The Economics and Finance Letters

June 2019, Volume 6, 2, pp 178-188

Determinants of Exchange Rate in Nigeria: A Comparison of the Official and Parallel Market Rates

Yusuf Wasiu Akintunde


Oyegoke Ebunoluwa O


Gylych Jelilov


Haruna Timipre Mary

Yusuf Wasiu Akintunde 1 ,

Oyegoke Ebunoluwa O 1 Gylych Jelilov 1 Haruna Timipre Mary 4

  1. Department of Economics, Nile University of Nigeria, FCT Abuja, Nigeria. 1

  2. Central Bank of Nigeria, FCT Abuja, Nigeria. 4

Pages: 178-188

DOI: 10.18488/journal.29.2019.62.178.188

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Article History:

Received: 30 July, 2019
Revised: 04 September, 2019
Accepted: 08 October, 2019
Published: 11 November, 2019


The need to understand what drives exchange rates is now very crucial, an understanding of its determinants particularly in a developing nation like Nigeria would indeed aid in policy decisions of the sovereign monetary authorities. The study examines the determinants of exchange rate in Nigeria comparing the official exchange rates and the parallel market rates from the post SAP era of 1986 to 2017 using quarterly time series data. The potential determinants of the exchange rate was identified resting on existing literature viz ; GDP, inflation, interest rates, imports, oil exports, non-oil exports, and reserves. The time series properties were tested utilizing the Augmented Dickey-Fuller (ADF) unit roots test of stationarity, the variables were tested for co-integration and the Auto-regressive Distributed Lag Model (ARDL) was applied. The result suggests that GDP, inflation, interest rates non- oil exports, oil exports and reserves are the major determinants of official exchange rates in Nigeria, while inflation, Non-oil exports and GDP are the major determinants of alternate or parallel exchange rates.
Contribution/ Originality
The study contributes to the literature by examining the determinants of exchange rate in Nigeria comparing the official exchange rates and the parallel market rates from the post SAP era of 1986 to 2017 using quarterly time series data.


Official exchange rates, Alternate exchange rates, Monetary policy, GDP, ARDL, ADF.



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This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.


All authors contributed equally to the conception and design of the study.

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