Effect Of Remittances On The Value Of Local Currency In Nigeria

Abstract

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.