Citation:

Agbeyeke Catherine Chukwurimazu, Dr. Chukwugoziem Tom Ezi. "Exchange Rate Dynamics and Agricultural Sector Performance in Nigeria: An Empirical Analysis" International Research Journal of Economics and Management Studies, Vol. 4, No. 3, pp. 254-265, 2025.

Abstract:

The intricate relationship between exchange rate movement and agricultural performance in Nigeria, 1985-2023, is the focus of this study, seeking to fill a fundamental knowledge gap in the interaction between currency fluctuations and agricultural productivity in emerging economies. A rich time series approach that includes Johansen cointegration and Vector Error Correction models is employed to analyze the varied effects of exchange rate fluctuations, monetary policy change, and trade openness on agriculture. Our results provide three important insights: (1) depreciation of the exchange rate has a strong positive correlation (0.866) with agricultural export competitiveness while raising the cost of inputs; (2) monetary policy interest rates reveal a strong negative effect (-0.227) on sector performance via channels of credit availability; and (3) trade openness reveals a doubly sensitive effect, with short-run adverse effects but long-run positive contributions to agricultural growth. These findings contradict the traditional wisdom of exchange rate impacts on farm productivity in developing countries. The research offers empirical support for policymakers to maximize exchange rate management policies, implying that a balanced strategy taking into account both export competitiveness and input cost stability is essential for long-term agricultural development in emerging economies.

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Keywords:

Agricultural Performance, Exchange Rate, Monetary Policy, Nigeria, Trade Openness.