European Journal of Accounting, Finance and Investment

Foreign Currency Exchange Rate And Return On Assets Of Listed Manufacturing Firms In Nigeria

Foreign Exchange Rate, Return On Assets Of Listed And Manufacturing Firms In Nigeria

adesola akande

elizade university, ondo state.

AMEDU, Emmanuella Orhunwakho

Keywords: Exchange Rate, Real Exchange Rate, Nominal Exchange Rate, Interest Rate, ROA

Abstract

^ABSTRACT

This study examined the foreign currency exchange rate effect on Return on Assets of listed manufacturing firms in Nigeria between 2013 – 2022. Financial data of ten selected manufacturing firms quoted on the Nigeria stock exchange that embark on production of industrial and consumer goods were collected through CBN Statistical Bulletin and annual reports of the selected companies. The obtained data were analysed with E-view version 9.0. The result showed a positive-relationships between the Real Effective Exchange Rate and the return on assets metrics as the Granger Causality Wald Tests-result offers insights into potential causality relationships of the economic variables. The study concludes that the significant interactions between financial performance variables and the real exchange rate of an economy dictates a broad spectrum of economic opportunity indicators in a complex and interconnected economy and it remains essential to grasp the dynamics due to the global economic intertwinements and external forces capable of shaping Nigeria economy at any rate. With this, the result of the study provides a guidepost to manufacturers in their transactions with their trade partners across the border.  The study strongly recommends the utilization of Real Currency Exchange rate by financial and economic regulators in Nigeria to enhance manufacturing entity’s performance financially in developing economy.