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ABSTRACT
The study examined the impact of exchange rate volatility on stock market performance in Nigeria for the period 1991 to 2021 (31 years). The objectives of the study were to find out whether exchange rate fluctuations, money supply and inflation rate significantly affect stock market performance. The correlation coefficient was first employed to examine the background characteristic among the data set. Exchange rate volatility/fluctuations was generated using the EGARCH model; while the ordinary least square (OLS) was employed for the main analysis of the study. The results from the empirical analysis generally indicate that exchange rate in Nigeria was very volatile; it was also found that exchange rate fluctuations have significant positive impact on stock market performance within the period of investigation. On the other hands, while money supply (M2) has significant positive impact on stock market performance, inflation rate (INFR) has significant negative relationship with stock market performance in Nigeria. The study recommends that, the CBN should constantly increase total money in circulation in order to make more money available to investors; this can be done by encouraging deposit money banks and Nigerian exchange limited to provide debt instruments to domestic and foreign investors since it may be used for speculation in the currency market. Doing this will go a long way to fast track the development of the Nigerian financial market and also reduce the risk of heightened currency speculation and macroeconomic instability.
