Responsiveness of Macroeconomic Variables to Currency Devaluation in Nigeria

This study examined the responsiveness of macroeconomic variables to currency devaluation in Nigeria within the period of study. However, the specific objectives include, Examine the impact of currency devaluation on the real gross domestic product (RGDP) and as well ascertaining the influence of currency devaluation on interest rate in Nigeria. The study fully embarks on secondary data therefore, an ex-post facto design was adopted for the study. The data was drawn from the Statistical Bulletin of the Central Bank of Nigeria (CBN), Statistical Bulletin, National Bureau of Statistics (NBS), and Debt Management Office (DMO). The data are set from 1986 to 2018 (33-years) period. An Econometric data analysis technique was used to analyze the data. that currency devaluation has a negative impact on real gross domestic product in Nigeria as was explained by the negative coefficient value (-0.244422) of our explanatory variable and the corresponding probability value 0.0124 < 0.05. It implies that Currency devaluation had a negative and significant impact on real gross domestic product (RGDP) in Nigeria. While Currency devaluation has a negative but no significant influence on interest rate in Nigeria. It was observed that the coefficient of (-1.212822) for currency devaluation is negative, hence indicative of a negative effect on the explanatory variable. But the t-Statistics of - 2.001147< 2 and the probability value of 0.0632 > 0.05, indicated that there is no significant effect. Based on the finding, we hereby concluded that currency devaluation responses to the real gross domestic product, is negative as well as significant and it also responds negatively to interest rate as well as insignificant within the period of the study. We recommended that; Currency devaluation should be discouraged in an import-driven economy like Nigeria as it precipitates negative effects on economic growth. And to encourage the growth of the real domestic product, the government should step up policy to spur the domestic industry to produce enough for exportation which will go a long way to boost the economy by the improved favorable interest rate.