This research investigates the effect of remittances on exchange rate in Nigeria.
Secondary data were used to achieve the objective. Using vector error
correction model result from the long run estimates revealed that remittances
positively affect exchange rate whereas FDI show negative effect. At the same
time the granger exogeneity causality test based on VECM shows that the short
run causality positively runs from remittances to FDI. The result generally
indicates that improvement in personal remittances would be favorable to the
value of local currency in Nigeria. It is therefore essential to encourage
remittances from abroad and at the same time re-visit FDI inflow policies in the
country.