ABSTRACT
The primary aim of this project is to estimate the long run relationship between economic growth and currency devaluation. This project investigated the impact of currency devaluation on economic growth of Nigeria. This was achieved through a review of literature. In order to generate the necessary data for this research, the Central Bank of Nigeria Statistical Bulletin of and publications of the National Bureau of Statistics were used for the period of 2008 to 2017. The error correction mechanism result indicates that short term changes in economic growth may actually be sufficiently explained by currency devaluation and other factors selected in the model. Thus, there exist a significant short term relationship between economic growth and currency devaluation.
The project shows that in the short run currency devaluation leads to increase in output and improves the balance of payments but in the long run the monetary consequence of the devaluation ensures that the increase in output and improvement in the balance of payment is neutralized by the rise in prices. This project therefore supports the monetarists’ view of currency devaluation. Based on the above it is recommended that the monetary authorities should do what they can to reduce the temporary increase in prices lest it become permanent. Timing at this point becomes very crucial. More so, the Nigerian government should consider devaluation of currency as the last resort to the economic imbalance.
TABLE OF CONTENT
CHAPTER ONE
1.0            Introduction -------------------------------------------------------------- 1
1.1            Aims of the study -------------------------------------------------------- 4
1.2            Objective of the study --------------------------------------------------- 4
1.3            Scope of the study ------------------------------------------------------- 4
CHAPTER TWO
2.1     Literature review ---------------------------------------------------------- 5
2.2     Statistical tools ------------------------------------------------------------ 7
CHAPTER THREE
3.0            Methodology--------------------------------------------------------------- 10
3.1            Data collection ------------------------------------------------------------ 10
3.2            Method of data collection ----------------------------------------------- 10
3.3            Problem encountered ----------------------------------------------------- 15
CHAPTER FOUR
4.0            Presentation of data and Analysis------------------------------------- 16
4.1     Presentation of data ------------------------------------------------------ 16
CHAPTER FIVE
5.1     Conclusion ------------------------------------------------------------------ 21
5.2     Recommendation ----------------------------------------------------------- 22
          Bibliography/reference ----------------------------------------------------- 24
CHAPTER ONE

1.0
Almost over a decade ago, Nigeria currency (? ) has been economically devalued;

consequently, the economic system of this country has devalued due to our currency devaluation. The foreign currency is no longer favourable but deficit. Imported commodities were highly ostentatious, thereby having a strong effect in elevating value of domestic goods made.
In the eighteenth century, there was nothing like use of money but form of trade by barter, a pattern of buying and selling was use. Trade by barter is a form of trade which involves the exchange of real wealth. Such exchange meant losing possession of what you have for what you need. This form of trade creates a number of difficulties such as double coincidence of want, indivisibility of unit of exchange haggling and cheating, etc.
The problems highlighted are militating against the use of trade by barter as a means of effective exchange rate, it is essential that an independent factor, by which the value of all goods and services could be measured be introduced. This brought about the evolution of money to facilitate exchange and as a measure of wealth, power and riches.
At different period of the history of man all over the world, many different commodities have served as money for example, ore and tea in China, bas of copper in ancient Rome, rice in Japan, Sail in Arabia and India, dust in Gold west, cowries shell in some parts of Africa like Delta area, use of twisted manila okpogo or ojoma in Ibo land and iron ore in kafanchan and some part of Plateau State, etc.
All these were later discarded and precious metal are used in form of money. Firstly, silver was used but later gold superseded silver and the amount of metal at first being staged was cutting of the metal into piece of definite weights. This brought about the use coins. Initially
 
coins were expected to be worth the full face value a metal but later coin were taken of limited value as legal tender were issued.
Paper money comes into use in form of receipt given by goldsmiths in exchange for deposit of coins. Due to the development and use of modern money, it was easy for the Nigeria government to introduce different types of money of different denomination. Bank credit and deposit, use of cheque, direct debit, credit transfer, bank draft e.t.c were then introduced. And ultimately promissory note which is yet to be implemented, the use of money was more significant in view of its multiple functions such as money serves as a medium of exchange, store of value, measure of value, divisibility and standard of different payment.
Despite the value-ability of the Nigeria currency, it becomes necessary to devalue it due to some stringent factors, such as:
1.    Low production of domestic commodities such as; crude oil, , wheat, coca, cotton, palm oil, e.t.c. when there is low productivity within the country, it could lead to scarcity of food and thereby purchasing power of money will go down.
2.    Low supply of export; when the rate of export is low compared to import, the foreign exchange market will not be favourable to that country�s economy but rather debt that tends to lower the exchange rate currency following the subsequent implication of
currency devaluation in Nigeria. One would now define devaluation as the reduction in the value of a country�s currency i.e in comparison to other countries, the value of the devalued currency becomes lower.


EFFECTS OF DEVALUATION
 
I.    Creates supply for export; producers become encouraged by the increased demand to produce more for sale abroad or outside the country affected by the devaluation of the currency.
II.    Export becomes cheaper; with a given amount of money. Foreigners, that is those buying goods from a particular country can exchange for more on the devalued currency and hence be able to buy more goods from the devalued currency. That is, export from the devalued currency becomes cheaper due to currency devaluation of that country.
CONDITIONS FAVOURING DEVALUATION

The success or failure of devaluation to achieve its objectives depends on the following conditions;
1.    Elasticity of supply: devaluation will be successful if the supply of the devaluing country�s export is elastic. That is, if the supply can easily change to meet change in demand for the export concerned, but if the supply of the devaluing country�s export is inelastic, that is, cannot increase to meet increase in demand. It is not advisable to resort to devaluation if the aim is to improve visible export earnings.
2.    Elasticity of demand: demand for the devaluing country�s export must be elastic for that country to be successful, that is, foreign demand for the devaluing country�s export should easily expand in respond to the fall in price of the export.
3.    Other country�s reaction: for example, retaliation, devaluation can be successful to some extent if other countries devalue their currencies too. In such scenario, one country can attract enough world market cheaper than the other, in order to gain more foreign demand will be successful. Therefore, it is obvious that devaluation can only emanate when there
 
is a currency comparison of one�s country with another. In this study, US Dollar is used to compare the devaluation of Nigeria currency (Naira).
1.1    AIM OF THE STUDY

The research work is aim at stimulating domestic production for export.

1.2    OBJECTIVE OF THE STUDY

The project or research work is set for the following objectives;

1.    To fit a trend equation of the average exchange rate of the Naira per one US Dollar (? /$1.00)
2.    To make possible forecast.
1.3    SCOPE OF THE STUDY
The project is limited to the currency devaluation in Nigeria and is measured against the United State od America Dollar. The US Dollar is one of the strongest recognised currencies in the universe and more especially in the Africa continent. The source of this information was from the department of foreign operation, Central Bank of Nigeria (C. B. N.).