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ABSTRACT
Exchange rate is the price of one currency in terms of another currency.
Exchange rate stability has to do with government actions in order to
stabilize exchange rate so as to increase export in Nigeria especially export
of primary products (agricultural produce) over the years, Nigeria has
adopted various exchange rate regimes ranging from fixed exchange regime
to floating exchange regime. The main purpose of this work is to determine
to what extend does the volatility and risks of exchange rate affect exports of
agricultural produce in Nigeria. To do this, the classical Linear Regression
Model is applied and the ordinary least square econometric technique is also
used to estimate the impact of exchange rate on agricultural export trade
earning. The variables used are export trade earnings as the dependent
variable and exchange rate, interest rate, inflation and agricultural out put as
the independent variables. Economic test shows the piori criteria of the
parameters used to determine if it conforms to the economic theory. The
statistical criteria employed are the F – test, the T – test and R2 which tests
the significance of the parameters. The econometric criteria (second order
test) used are the Durbin Watson test, which tests for the auto correlation
and the randomness of the residuals. The Jarqu-Bera criteria is used to test
for normality of the residuals. From the analysis of the result, it shows that
there is a relationship export performance of agricultural product and real
exchange rate stability in Nigeria. Exchange rate stability has a positive and
significant effect on agricultural export. An increase in exchange rate
stability raises the marginal utility of export revenue and therefore induces
them to increase exports.