MANAGING FOREIGN EXCHANGE RATE EXPOSURE: THE NIGERIAN PERSPECTIVE (2019-2023).

Authors:</strongOkechukwu Cajetan ONWULIRI management & Social Sciences Division, Polytechnic Programmes Department, National Board for Technical Education (NBTE), Kaduna, Nigeria. Onwuliri7@yahoo.com Uchenna Chiwendu NWANKWO Accountancy Department, School of Management Sciences, Grundtvig Polytechnic, Oba, Anambra State, Nigeria. chinwenduuchenna@gmail.com Emmanuel Obiora NWAKEZE Accountancy Department, School of Management Sciences, Grundtvig Polytechnic, Oba, Anambra State, Nigeria. *Corresponding Author: moredayshopesngltd@gmail.com Ijeoma Chineme OKORIE Department of Mathematical Sciences Nigerian Defense Academy, Kaduna, Nigeria Ijeomaokoriefonda.edu.ng

Journal: Nigerian Journal Of Technical Education | Volume: 23 | Issue: 2 | Pages: 75 - 88

Keywords: Foreign Exchange Exposure, Foreign Exchange Rate, Foreign Exchange volatility, Economic Growth, Gross Domestic Products (GDP), Hedging, Currency Forwards, Currency futures, Currency option, Cross currency swap, Natural hedging.

Abstract

The increasing interest in the subject of management of foreign exchange exposure in Niger has been sequel to the rising transactional, translational and economic risks experienced in country. Thus, concerns for the incessant devaluation of the naira (increasing foreign excha rate) continued to mount, explaining the main objective of this study in attempting to evalu the most suitable and effective measures and techniques for the management of foreign exchange rate exposures, while attempting to demonstrate the relationship between foreign exchange rate exposures and the economic growth of a developing country like Nigeria. Expo-facto design was deployed for this study. Regression analysis, descriptive statistics, residual statistics, Collinearity Diagnostics and Durbin-Watson were the techniques used to analyze data and examine the relationship between the two major variables of the study. The yearly highest foreign exchange rates (Nigerian Naira to a US dollar) as at the official market; and the yearly average of the quarterly GDP of Nigeria, constituted the datasets, for the period 2019 2023 respectively. The study found a statistical and significant relationship to exist between the exposure and economic growth. The study concludes that a better exposure management would be achieved by the country with an efficient use of hedging measures (currency forwards, currency option currency futures, cross-currency swaps, or even "natural" hedging).