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ABSTRACT
This study examined the impact of exchange rate fluctuation on infrastructural development in Nigeria for the period 1986 to 2021. An ARCH/GARCH model was estimated along-side a VECM. After obtaining data stationarity using ADF and PP tests for unit root. The empirical findings showed that exchange rate has negative and significant relationship capital expenditures in Nigeria. While total exports have a positive and significant impact on capital expenditures in Nigeria. Total imports have a positive and insignificant impact on capital expenditure in Nigeria. External debt service payment has a negative and insignificant impact on capital expenditures. The coefficient of co-integrating equation revealed a slow adjustment speed parameter of about 21 percent convergence to long-run equilibrium after a shock. Finally, the ARCH/GARCH estimates revealed that the Nigerian exchange rate is controlled by its own GARCH components rather than ARCH factors or shocks.
