Moderating Role of Exchange Rate Volatility on The Effect of Foreign Direct Investment

This study examined the moderating role of exchange rate volatility on the effect of foreign directinvestment on growth in Nigeria. Specifically, the study sought to determine the effect of foreigndirect investment and foreign portfolio investment on economic growth as moderated by exchangerate volatility in Nigeria. With Ex post Facto research design, the study employed secondaryquarterly time series data from the Central bank of Nigeria Statistical bulletin (2023) for the periodof 2002 to 2022. The study adopted GARCH model, descriptive statistics, unit root test, co-integration test and Autoregressive descriptive Lag (ARDL) to establish the moderating role ofexchange rate volatility on the effect of foreign direct investment on economic growth in Nigeria.With the aid of ARDL analysis, foreign direct investment had insignificant effect on economicgrowth in Nigeria. While, foreign portfolio investment had a positive significant effect oneconomic growth in Nigeria. The study recommended that there is need for government to createa friendly environment with improved security conditions and also the CBN should provide forexliquidity in the financial system to respond to demands for foreign exchange and for foreigninvestment, economic stability and positive investor’s confidence in the economy. Governmentshould also evolve sound foreign exchange policies by removing barriers to capital accounttransactions with every sense of objectivity, economic management dexterity in line with globalbest practices that would strengthen the attraction of foreign portfolio investment