Global Economic Uncertainties, Foreign Capital Inflow and Foreign Exchange Market Pressure in Nigeria

  • Emmanuel Tordue Kpoghul Benue State University Makurdi, Nigeria
  • David Terfa Akighir Benue State University, Makurdi, Nigeria
  • Tersugh Ashifa Benue State University Makurdi, Nigeria
  • Martin Terngu Kpoghul Benue State University Makurdi, Nigeria
Keywords: Exchange Market, Global Economic Uncertainties, Foreign Capital Inflow JEL Classification Codes: F2, F3, F44

Abstract

The Nigerian economy being a capital scarce, monolithic and import-dependent economy is worse hit by global economic uncertainties especially in the past three decades. This study therefore examines the impact of global economic uncertainties on the Nigerian foreign exchange market due to foreign capital inflow over the period from Q1 1986 to Q4 2021. A non-parametric quantile-causality test and the Structural Vector Autoregressive (SVAR) were employed to ascertain the transmission mechanism of global economic uncertainty to Nigeria’s foreign exchange market pressure via foreign capital inflow. The study found that global economic policy uncertainties granger causes foreign exchange market pressure in Nigeria from the middle to extreme tails. It also found the sensitivity of foreign exchange market pressure to uncertainties in global economic policy through foreign capital flow channels such as Official Development Assistance (ODA), Foreign Direct Investment (FDI), remittances and Foreign Portfolio Investment (FPI). The study, therefore, recommended that a deliberate policy aimed at increasing domestic production and export of non-oil goods and services that will increase the availability of foreign exchange to the economy and consequently reduce excess demand on foreign exchange market in Nigeria.

 

Author Biographies

Emmanuel Tordue Kpoghul, Benue State University Makurdi, Nigeria

Department of Economics, 

 

David Terfa Akighir, Benue State University, Makurdi, Nigeria

Department of Economics

 

Tersugh Ashifa, Benue State University Makurdi, Nigeria

Department of Economics

 

Martin Terngu Kpoghul, Benue State University Makurdi, Nigeria

Department of History

 

Published
2023-02-23