An Analysis On The Persistent Depreciation Of The Naira In The Foreign Exchange Markets Causes, Effects And Solutions

This study examined the persistent depreciation of the Naira in the foreign exchange markets causes, effects and solutions. Specifically the study focused on determining the effect of the depreciation of the naira on Nigeria’s economic growth level and on the industrial sector, finding out the factors that cause the persistent depreciation of the naira, investigating the various avenues through which it can be alleviated and making recommendations based on the findings. The study was anchored on the PPP theory. The study employed the survey descriptive research design. 

A total of 150 respondents were selected as sample size using convenient sampling method. The questionnaire was used for data collection, while the data collected were analyzed using frequency tables, and mean scores. From the responses obtained and analyzed, the findings reveals that the extent depreciation of the naira have effect on the Nigeria’s economic growth leve is high. The study also revealed that the extent the depreciation of the naira has affected the industrial sector is high. The study therefore recommended that monetary authorities should adopt an exchange rate targeting approach which calls for the use of defined fundamental factors to determine equilibrium exchange rate. Thereafter, administrative mechanism may be used to support the market to sustain such a rate by way of occasional intervention. We may call this a managed float system. This would mean non-reliance on the moves of speculators in the determination of exchange rate.