ABSTRACT

Nigeria in the last few years has been clamoring for Foreign Investment in the country. This believed to be a facilitator to economic growth and development, which is believed to lead to industrialization of the economy in the long run. Foreign Investment is known to play an important role in the future as a source of capital, managerial expertise and technology for both the developing economies and economies in transition. Foreign Investment performance is based on certain factors that determine its flow. This study is focused at seeing the relevance of Exchange Rates on Foreign Private Investment In Nigeria.

Augumented Dickey – Fuller (ADF) unit root test statistics was used on the series for the model to check their stationarity of exchange rate and other relevant variables after which it was estimated. Times series data from period 1970 to 2001 was used for the analysis.

It was discovered after estimation that Exchange rate is the most important variable that affects Private Foreign Investment in Nigeria of all the other macroeconomic variables such as interest rates, inflation rate and Gross Domestic Product used in this study.

Exchange rate was recommended to be more market responsive, inflation rate should be pursued to single digit and there should be more generous incentives for foreign direct investment in the country.