An Analysis of Exchange Rate Fluctuations and the Performance of the Non-Oil Sectors in Nigeria

The study examined the Effect of Exchange Rate Fluctuations on Non-Oil Sectors in Nigeria. Nigerian economy has long been heavily reliant on the oil sector, with crude oil exports playing a dominant role in revenue generation and foreign exchange earnings. However, this heavy dependence on oil has made the economy vulnerable to fluctuations in global oil prices and other external factors, such as exchange rate volatility. This study made used of secondary data involving time series. The study employed a Vector Autoregression (VAR) model. The result shows that the VAR model is significantly different from zero. This is because each statistics is greater than the critical value of 0.0001 at 5% level. It revealed that there is a significant effect of exchange rate fluctuation on non-oil sectors in Nigeria during the study period. The study further revealed that non-oil export has a positive relationship with the non-oil output both in the first and second lagged. The study concludes that the effect of exchange rate fluctuation on non-oil sector in Nigeria cannot be undermined. This is because it is critical to the development of the nation. The research recommends among other things that a workable Exchange rate should be fixed by the monetary authorities to reduce its negative effect on the economy and that the central bank as the monetary authority should stand strong on sure a policy.