VOlUME 01 ISSUE 01 SEPTEMBER 2024
1Lasisi, Oparinde Rasheed, PhD, 2Fijabi, Kolawole Lateef
1Department of Accounting Babcock University, Ilishan-Remo, Nigeria
2Doctor of Accounting, Precious Cornerstone University, Ibadan, Nigeria
ABSTRACT
This paper examined the effect of public debt on exchange rate in Nigeria. Public debt was proxy by external debt, internal debt, debt servicing and inflation rate while exchange rate was proxy by the Nigeria’s exchange rate. The study employed secondary data, which was sourced from Central Bank of Nigeria Statistical bulletin and Debt Management Office over a period of 25 years from 1999 to 2023. Ex post facto research design was adopted for the study. The result of the study revealed that public debt was a positive determinant of exchange rate in Nigeria with a p-value of 0.0000 and f statistics of 212.10. Regression to test the hypothesis at a significance level of 5% showed that external debt, internal debt, and debt servicing positively and significantly affected the exchange rate in Nigeria with to statistics of 6.14, 5, 4.60 and p-value of 0.000,0.000 and 0.000 respectively. While inflation rate was positive but insignificantly affected exchange rate in Nigeria with t-statistics of 1.61 and p-value of 0.122. The study therefore recommends that Policymakers in Nigeria are advised to minimize external debt to finance budget deficits, minimise expenditures by eliminating corruption and boost domestic revenue generation. In addition, government of Nigeria should ensure it obtains self-liquidating, production or project-based loans for funding projects; and extended maturity periods; promptly and consistently service foreign loans to prevent problem associated with compound interest accumulation.
KEYWORDS:debt servicing, exchange rate, external debt, inflation rate, internal debt, public debt.
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