Exchange Rate and Manufacturing Sector Performance in Nigeria

Abstract

This study examined the impact of exchange rates on the performance of the manufacturing sector in Nigeria between 1990 and 2020. Using canonical cointegrating regression (CCR) framework, the result obtained showed that exchange rate devaluation constrains manufacturing sector while exchange rate fluctuation hampers manufacturing output. The study indicated that price increase leads to decline in the manufacturing sector, the study recommends among other things the need to formulate policies that align with the exchange rate to the actual needs of the manufacturing sector. The study further suggests that change in exchange rate management strategy should be allowed to run a reasonable course of time. Jettisoning strategies at will and on frequent basis has implication for exchange rate and obvious consequence for a sector that depends on foreign inputs.