Exchange Rate Movements: External Debt Problems in Nigeria 1980-2010

Authors

  • Dr. Kola Subair
  • Prof. Somoye
  • Prof. Sheriffdeen Tellal

Abstract

Copious of arguments for debt contractions have been put forward especially in favour of the need for developing countries to attain economic growth. This arises as a result of inad¬equate savings coupled with the inability of the developing countries to operate within the stipulated debt limit. As such the debts mount and the burden keeps rising. The mounting debt is more complicated when it is externally sourced as it requires foreign exchange for its redemption. Unfortunately the fluctuation in the exchange rate further inhibits the payment of interest that eventually adds more to the initial principal amount borrowed.Observing the Nigeria debt portfolio and its exchange rate movements for some years, the latter's impact has continued to influence the former negatively. This paper thus seeks to use co- integration technique to test for the extent of their relationship from 1980 to 2010.By so doing, the exchange rate influences the external debt to a greater extent and thus requires that Nigeria must source for other means of financing its growth and development. Further to this, the country should ensure a more conducive macroeconomic environment to¬wards attaining a stable exchange rate.

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Published

2015-12-01

Issue

Vol. 10 No. 2 (2015): Market Forces Research Journal Volume 10 No 2

Section

Articles

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