EXCHANGE RATE FLUCTUATIONS AND MONEY MARKET PERFORMANCE IN NIGERIA (1990 – 2024)

This study investigated the effects of exchange rate fluctuations on money market performance in Nigeria for the period 1990 - 2024. Exchange rate was pictured using Naira to Dollar, Naira to British Pound and Naira to Swiss Franc exchange rates while money market performance was gauged using outstanding value of money market instruments. Adopting a quasi-experimental research design, secondary data on the aforementioned variables were used for the study and these data were sourced from Central Bank of Nigeria (CBN) statistical bulletin, 2023 and 2025(Q1) editions. The data set so assembles was first subjected to descriptive analysis, and subsequently to Augmented Dickey Fuller (ADF) unit root test, Johansen cointegration test, granger causality test, ECM estimation and a set of post estimation (diagnostic) tests. Results basically revealed that Naira-US Dollar exchange rate has a positive insignificant effect on value of outstanding money market instruments while Naira-British pound and Naira-Swiss Franc exchange rates have negative insignificant influences on value of outstanding money market instruments. Subsequently, the study showed that there is a long run equilibrium relationship between the variables to the extent that in event of any shock, the speed of adjustment is about 10.98% per annum. The study therefore concluded that exchange rate movements have a long run insignificant effect on money market performance in Nigeria. Hence, there is need to strengthen the naira by taking drastic and proactive measures that will discourage importation and encourage exportation; there is need to encourage more investments into the Nigerian money market by arresting the deteriorating security situation in the country as investment tends to flow away from environments where there is instability, uncertainty and insecurity; and there is urgent need for serious publicity and education about the existence and benefits of patronizing the money market. These moves will reposition the Nigerian capital market and enable it to attract more funds.