EXCHANGE RATE FLUCTUATION AND IMPACT ON IMPORTED GOODS IN NIGERIA
- Project Research
- 1-5 Chapters
- Quantitative
- Simple Percentage
- Abstract : Available
- Table of Content: Available
- Reference Style: APA
- Recommended for : Student Researchers
- NGN 3000
BACKGROUND OF THE STUDY
Since the conclusion of the civil war, the Nigerian economy has been very volatile. Following the conversion of the Nigerian Pound to Naira in 1973, fixed exchange rates were established for both the Pound sterling and the US Dollar at £0.5833 and US 1.5200 to N1.00, respectively. This has wreaked havoc on the Nigerian economy, as the exchange rate of the Naira to both the US dollar and the British pound sterling has been recorded, and the economy has also experienced the greatest level of inflation (Obaseki 2017). As a result, Nigeria as a country has lost its financial credibility in the outside world, while at home, because the exchange rate is net in our favour, the country has seen the biggest amount of brain drain.
Bizzarely, Ojo (2020),Exchange rate swings have impacted most of our industries that import all or part of their raw materials, resulting in output below capacity utilisation and unemployment. Again, due to the exchange rate, most locally produced items are pricey, pricing themselves out of the market. The rate at which Naira is exchanged for Dollar impacts the market price of products. As a result, fluctuations in the exchange rate affect the pricing of imported items, either upwards or downwards. At the same time, the fact that the majority of raw materials and machinery are imported impacts the price of locally produced items, and the prices at which the currency of exchange is secured affect the price favourably or adversely.
Apparently, controlling exchange rate fluctuations in the money market has been a source of contention for both the government and individuals. This has resulted in the country's continuous quest for a viable economic system, which has led to the adoption of FEM. a. Determination of a reasonable exchange rate for the Naira
b. Using the topic mechanism to direct resources to the economy's most deserving sectors.
According to Samuel (2019), the currency rate has a beneficial impact on imports. When the exchange rate is high, imports of products fall, except for needs, which have a minor response to the exchange rate. The exchange rate has a favourable impact on the pricing of imported items. In fact, however, imports respond faster to changes in domestic income than to changes in the actual exchange rate. Again, if prolonged, a change in the real exchange rate will eventually have a considerable impact on both import and export levels. Imports, on the other hand, have been increasing since 1985. When the Naira depreciates, the exchange rate moves downward, making imports highly expensive; conversely, when the Naira rises, imports benefit.
Due to increases in the pricing of inputs utilised in the manufacturing process, adverse fluctuation rates result in losses or decreased profit. Nigeria is heavily reliant on imported inputs and raw materials to sustain its diverse industrial enterprises. As a result, with each Naira depreciation, the price of imported inputs soars in terms of Naira, which is transmitted to the entire economy in the form of higher prices of goods and services and intolerable inflation, because a fall in the international value of the Naira makes Nigerian goods cheaper in foreign currencies and foreign goods more expensive in Naira. This shift in the Naira exchange rate tends to improve the quality of products exported from Nigeria while decreasing the quality of items imported into Nigeria. During the assessment period, 2000-2012, Nigeria had the highest inflation rate among its trading partners. Whether Nigerian goods become more or less competitive in the global market is determined by whether the increase in Nigerian competitiveness is justified by genuine economic events such as technical improvement, changes in external conditions, taxation changes, and so on. Exchange rate fluctuations provide producers a particular edge in terms of cost competitiveness (Ojo 2020).
The main disadvantage of the Naira's depreciation is that it makes planning extremely difficult. Because the exchange rate continues to fluctuate, making company estimates erroneous, marketing specialists and managers are confronted with the challenge of developing appropriate strategies, marketing plans, and operations.
Related Project Materials
EFFECTS OF CHLORPHENIRAMINE ON THE PHARMACOKINETICS OF ASCORBIC ACID IN HEALTHY MALE VOLUNTEERS
ABSTRACT
Ascorbic acid is a vitamin commonly used in the treatment of common cold and scurvy. It interacts with some drugs during absorpt...
IMPACT OF ADULT EDUCATION ON REDUCING CRIME RATES
Abstract: This research explores the impact of adult education on reducing crime rates. Adult education programs play a vital role in reducing...
AN EXAMINATION OF THE LEGAL REGIME FOR PRODUCTION SHARING CONTRACTS IN THE UPSTREAM PETROLEUM INDUSTRY IN NIGERIA
Aim and Objectives of the Research
The aim of this research is to examine the fiscal regime for production sharing contr...
A DISCOURSE ANALYSIS OF JESUS’ CONVERSATION WITH THE SAMARITAN WOMAN
ABSTRACT
It is a known fact that Discourse Analysis is the analysis of language in use. This work showed how discourse analysis and pragm...
BIOCONTROL POTENTIAL OF BACILLUS THURINGIENSIS ISOLATED FROM SOIL SAMPLES AGAINST LARVA OF MOSQUITO
ABSTRACT
A major challenge for achieving successful mosquito control is overcoming insecticide resistance. Bacillus thuringiensis which i...
INTEGRATING PSYCHOGRAPHIC PROFILING FOR IMPROVED SALES (A CASE STUDY OF SHOPRITE)
ABSTRACT
This study was carried out to examine the integrating psychographic profiling for improved sales using Shop...
SOCIAL FACTORS AFFECTING EFFECTIVE TEACHING AND LEARNING IN SENIOR SECONDARY SCHOOLS
ABSTRACT
This study was conducted to find out the social factors affecting effective teaching and learning in senior sec...
TERRORISM IN NIGERIA: A SEARCH FOR SOLUTIONS
ABSTRACT
Terrorism is on the increase in Nigeria. Basic socio-political activities in Nigeria feature acts of terrorism as citizens emplo...
IMPACT OF ADULT EDUCATION ON ELDERLY POPULATIONS
Abstract: This study examines the impact of adult education on elderly populations, focusing on how educational programs tailored for older ad...
THE IMPACT OF ADVERTISING AND PROMOTIONAL STRATEGIES ON ORGANIZATION
BACKGROUND OF THE STUDY
Advertising consist of all the activities in presenting to a group. A non perso...
