Macroeconomic Performance Indicators and Exchange Rate Misalignment in Nigeria

This study employed an econometric approach to assess the relationship between effective real exchange rate and selected macroeconomic variables in Nigeria from 1981to 2014. This study investigate the relationship between REER misalignment and economic growth as well as examine the short run and long run relationship between real effective exchange rates misalignment and macroeconomic performance. The study found evidence of a long run relationship between real effective exchange rate and macroeconomic variables with 46 percent speed of adjustment. Also, the positive relationship exists between effective exchange rate, openness and terms of trade indicated that the Nigerian economy is highly opened and this openness has made it highly vulnerable to external shocks and exchange rate policy changes. Likewise, the real gross domestic leads to the appreciation of naira. Hence, the government should stimulate the productive sector of the domestic economy