Abstract:
The study is an attempt to empirically examine the impact of public external debt on exchange rate in Nigeria. The nature of data for this
study is secondary data and the major source of data is the Statistical
Bulletin published annually by the Central Bank of Nigeria (CBN) December,
2018.The study used Ordinary Least Squares (OLS) and Error Correction
Model (ECM) tools of analysis in the investigation of the impact and
relationship among the economic variables. The long and short run results
confirmed that public external debt has impact on exchange rate in Nigeria.
However, based on the probability value at the short run all independent
variables were statistically significant in explaining variation in Exchange Rate
in Nigeria except Foreign Reserve in Nigeria (FRN) at 5 percent level of
significance. While, at the long run the External Debt in Nigeria (EXDTN),
Debt Service Payment in Nigeria (DSPN) and Foreign Reserve in Nigeria (FRN)
Foreign Reserve in Nigeria (FRN) was statistically significant in explaining the
variation in Exchange Rate in Nigeria (EXCHR) at 5 percent level of significant.
Therefore, the study recommends that Government should increase the
mechanism to check and control the allocation and implementation of public
funds in Nigeria to reduce deficit budget and exchange rate in Nigeria.
