The effect of exchange rate fluctuation on households’ purchasing power in Nigeria (2000 – 2022)

The study investigated the effect of exchange rate fluctuation on household’s purchasing power in Nigeria between 2000 and 2022. While E-views student version 12 statistical software was employed in computing the result, time series data used in this study was sourced from the World Development Indicators Database (WDI). The econometric techniques used in the analysis were: The Unit Root Test, Johansen Co-Integration Test, Vector Error Correction Model. The Johansen cointegration results confirm that the variables are cointegrated, highlighting a long-run relationship among the variables. Furthermore, the result revealed that the exchange rate has a negative and statistically significant impact on GDP per capita at a 5 percent significance level. Based on the findings, the study recommended that the government adopt policies and strategies that would enable them to strengthen the value of Nigerian currency (naira) in the foreign exchange market and ensure exchange rate stability is maintained with other foreign currencies. However, a stable exchange rate can positively impact households’ purchasing capacity by reducing inflationary pressures and ensuring that imported products remain affordable.