The study examines the causal relationship between real exchange rate and foreign direct investment in Nigeria. Time series data for the period 1970 2020 was used. The Engel Granger technique was used to carry out the regression analysis and it was observed that the real exchange rate has significant effect on the flow of FDI into the country. After generating the misalignment of the real exchange rate on FDI, this work proceeded to find out whether there exists a long run relationship between real exchange rate and foreign direct investment. Based on the results, it was observed and concluded that exchange rate is positively related to, and it is an important determinant of, foreign direct investment in Nigeria. The paper therefore recommends a more realistic management of investment environment (with an eye on stability), public sector expenditure and other fundamentals as a necessary compliment to nominal positioning which will encourage investment flow.