This research study examined the determinants of exchange rate in Nigeria from 1980-2014. For this purpose, annual figures of interest rate, inflation and degree of trade openness at the economy were regressed on exchange rate in a framework of multiple models; ordinary least square (OLS) technique at estimation was employed.
The result revealed that inflation rate was an insignificant determinant of exchange rate. Also interest rate was revealed to be insignificant determinant of exchange rate while trade openness was revealed to be positive and significant determinant of exchange rate. On the basis of these, the study recommends the adoption of policies that would encourage and facilitate improvement in productivity in all sectors of the economy.
