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PERFORMANCE OF SELECTED CURRENCIES AT RETAINING THE VALUE OF NIGERIAN ASSETS (1998 - 2014)

Mufutau Abdul-Yakeen and Nasir Mukhtar GATAWA ()
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Nasir Mukhtar GATAWA: Usmanu Danfodiyo University, Sokoto

Authors registered in the RePEc Author Service: Mufutau Ayinla Abdulyakeen ()

No 702715, Proceedings of International Academic Conferences from International Institute of Social and Economic Sciences

Abstract: This study obtained Exchange Rate of Nigerian Naira (ERN) to currencies of twenty-one countries selected from major economic blocs on quarterly basis between 1998 and 2014. Least Square method extracts ERN to United States Dollar (USD) as dependent variable. Comparing ERN to USD with other Foreign Exchange (FE) using Augmented Dickey-Fuller (ADF) test shows only Ghanaian Cedi (GHC) being stationary at levels while others were at first difference. Co-integration test exposes that ERN to USD has long term relationship with ERN to all FE tested. Granger causality test shows that ERN to USD caused changes in ERN to sixteen of the currencies while other currencies behaved otherwise. Conclusively, USD is the Vehicle Currency while EURO is the best currency to store Nigerian Assets for their parameters are positive and significant at 1%; co-integrated at 10%; and ERN to EUR unilaterally cause changes in ERN to USD. Nigerians are encouraged to deposit more in EURO, but convert their deposits to USD for foreign transactions. The study confirms some of the criticisms meted on the results of regression analysis of time series data but discovered that only OLS and Trend analysis can give specific answers and recommends their employment if specific answers are needed.

Keywords: Assets; Currencies; Hard Currency; Trade Partners; and Vehicle Currency (search for similar items in EconPapers)
JEL-codes: A10 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2014-10
New Economics Papers: this item is included in nep-mon
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Published in Proceedings of the Proceedings of the 12th International Academic Conference, Prague, Oct 2014, pages 94-118

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https://iises.net/proceedings/12th-international-a ... id=7&iid=11&rid=2715 First version, 2014

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Persistent link: https://EconPapers.repec.org/RePEc:sek:iacpro:0702715

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