ABSTRACT
The Nigeria economic prior to the period of deregulation was one characterized
by increased deficit financing by the government, low external reserves and
unfavourable balance of payments. The acquisition of foreign exchange of
finance the importation of industrial imports poses a serious problem to the
industries. The inadequacy of foreign exchange needed, led to capacity underutilization
in most developing countries. Lack of raw materials locally, led to
dependency on imported raw materials. Also, differences in natural endowments
of different nations necessitate importation of raw materials from countries with
surplus. This study seeks to determine the extent at which foreign exchange
market has helped in the growth of the Nigerian economy. It is a survey method
of research with 105 as the sample size. Simple percentage was used as the
method of data analyses.
At the end of the study, it was found out that the use of
Letters of Credit (LC) as means of financing import via foreign exchange market
have increased the level of economic activities in Nigeria. Again, the Domiciliary
Account Operation contributed a great deal to the level of economic activities in
Nigeria. It should equally be noted that the Nigerian environment is such that
does not encourage capital investment, which implies that a de-regulatory interest
rate economy will not help in the growth of the economy. From the foregoing, it
is crystal clear that the value of naira is comparatively weak thereby turning the
economy into a cargo economy with its attendant effect on import dependency
which lead primarily to huge debt, affecting socio-political environment of
business in Nigeria. It is therefore, recommended that the Federal Government
should remove all the subsidy on sales of foreign currencies at all level
irrespective of the transaction involved as this will remove disparity between the
official and parallel market rate of price without government having to intervene.
The federal government should equally abolish the existence of parallel market
(that is black market) by legislation and strongly implement the dictate of the law
to the later on any offender without discrimination.
