Volume 2 - Issue 2, March - April 2026

This study investigates the determinants of the exchange rate in Nigeria from 1985 to 2023, employing advanced econometric techniques such as the Autoregressive Distributed Lag (ARDL) model and the Exponential Generalized Autoregressive Conditional Heteroskedasticity (EGARCH) model. The primary objective is to understand the influence of key macroeconomic variables—inflation, interest rates, foreign reserves, trade balance, and political stability—on the exchange rate. The results reveal a significant negative impact of the trade balance on the exchange rate, indicating that trade deficits exert considerable downward pressure on the Nigerian naira.The analysis also highlights the critical role of foreign reserves, particularly their volatility, in maintaining currency stability. Although inflation and interest rates did not show significant short-term effects, their long-term stability is essential for a predictable exchange rate environment. Political stability, while not immediately impactful, remains crucial for long-term economic confidence and currency strength. The study concludes with recommendations for policymakers to improve trade balances, manage foreign reserves prudently, maintain stable monetary policies, and enhance political stability to achieve a stable and favorable exchange rate.

Alasejebi, Babatunde Emmanuel,"Determinant of Currency Price in Nigeria" International Journal of Advanced Multidisciplinary Research and Educational Development, V2(2): Page(577-587) Mar-Apr 2026. ISSN: 3107-6513. www.ijamred.com. Published by Scientific and Academic Research Publishing.