WILBERFORCE JOURNAL OF THE SOCIAL SCIENCES (WJSS)
ISSN: 2504 – 9232
Volume 10, No. 2, November, 2025
Pages 1-12
DOI: 10.36108/wjss/5202.01.0210
THE OFFICIAL AND UNOFFICIAL EXCHANGE RATES DYNAMICS IN NIGERIA: CAN ECONOMIC GROWTH BE SPARED?
Osinusi Kunle Bankole (Ph.D.) 1, Aberu, Felix (Ph.D.) 2 & Majekodunmi Elijah Olawale 3
1, 2 & 3 Department of Economics, College of Social & Management Sciences. Tai Solarin University of Education, Ijagun, Ogun State. Nigeria.
Abstract
The effects of both official and black market currency rate fluctuations on Nigeria’s economic growth from 1996 to 2023 were investigated in this study. Annual time series data sourced from the World Bank, the Central Bank of Nigeria, and the National Bureau of Statistics were utilized, the main estimation technique used for the study is the robust least squares. The findings indicate a positive and significant link between the official exchange rate and GDP growth, it suggests that when domestic currency increases relative to foreign currencies, economic growth also improves. Equally, the black market exchange rate has a negative influence on GDP growth, inferring that an increase in the black market exchange rates hampered economic growth in Nigeria. Hence, the study recommends that, while it is difficult to remove exchange rate risk as Nigeria continues to make foreign investments, hedging measures can greatly lower them through proper management of the hedged exchange-traded funds (ETFs), and Forex risk can be covered more affordably as well. Hence, the government should exert influence on the parallel market for a sustained official exchange rate.
Keywords: Official, Unofficial exchange rate, Economic growth, Robust least square