PERFORMANCE OF SELECTED CURRENCIES AT RETAINING THE VALUE OF NIGERIAN ASSETS (1998 - 2014)

This study obtained Exchange Rate of Nigerian Naira (ERN) to currencies of twenty-one countries selected from major economic blocs on quarterly basis between 1998 and 2014. Least Square method extracts ERN to United States Dollar (USD) as dependent variable. Comparing ERN to USD with other Foreign Exchange (FE) using Augmented Dickey-Fuller (ADF) test shows only Ghanaian Cedi (GHC) being stationary at levels while others were at first difference. Co-integration test exposes that ERN to USD has long term relationship with ERN to all FE tested. Granger causality test shows that ERN to USD caused changes in ERN to sixteen of the currencies while other currencies behaved otherwise. Conclusively, USD is the Vehicle Currency while EURO is the best currency to store Nigerian Assets for their parameters are positive and significant at 1%; co-integrated at 10%; and ERN to EUR unilaterally cause changes in ERN to USD. Nigerians are encouraged to deposit more in EURO, but convert their deposits to USD for foreign transactions. The study confirms some of the criticisms meted on the results of regression analysis of time series data but discovered that only OLS and Trend analysis can give specific answers and recommends their employment if specific answers are needed.