INSTITUTIONAL REFORMS AND THE MANAGEMENT OF EXCHANGE RATE POLICY IN NIGERIA
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Date
1995-10
Authors
ODUBOGUN, KASSEY
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
Abstract
A market determined allocation of foreign exchange (FOREX) and the exchange rate is
considered necessary to an improvement in the competitiveness of the Nigerian economy both internally and in its trade and financial transactions with the rest of the world.
However, the realisation of the advantages of the market by an economy depends on the
functional character of its markets and its public institutions. This study has therefore
analysed from an institutional perspective, the evidence on Nigeria's FOREX management and exchange rate policy from 1960 to 1990. The outcome of each policy regime was compared in terms of (a) the trend in exchange rate (b) degree of exchange rate premium and (c) structure of FOREX allocation. Evidence suggests that in spite of the reform of 1986, the naira exchange rate is still not competitively determined and the
allocation of FOREX remains inconsistent with the requirements for the long-term development of the Nigerian economy. Evidence also indicate that the post-reform exchange rate policy has been adversely affected by government's expansive fiscal and
monetary policy. The major conclusion of the study is that given government's
macroeconomic policy and the character of the markets within which FOREX was traded
and the linkages between them, the naira exchange rate has little chance of covergence
and as a result, the possibilities for distortions in the allocation of FOREX remain very
high.
Description
HG 3987.7 O35 1995
Keywords
Foreign Exchange - Government policy - Nigeria , Foreign exchange - Ghana