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ABSTRACT
The project work investigate the relationship between exchange rate volatility and the agricultural sector in Nigeria from 1980 to 2022.The explanatory variables used in this study include real effective exchange rate, crude oil prices, money supply, gross domestic product and agricultural output as the dependent variable sourced from the World Bank, CBN Statistical Bulletins and annual reports as well as the OPEC Statistical Bulletin. Unit root tests were conducted using the Augmented Dickey-Fuller test and Phillip-Peron in order to test for the stationarity of the variables. Engle-Granger cointegration test was used to ascertain the long term relationship between variables. The study used the error correction mechanism to determine the coefficients of the respective explanatory variables. The finding of the results shows that ECM coefficient was negative and highly significant at the 5% level, signaling that the speed of adjustment with which short run dis-equilibrium is corrected is very fast in Nigeria. It shows the existence of dynamic long-run equilibrium. The results also show a positive and significant relationship between real effective exchange rates, broad money and the agricultural sector in Nigeria while Crude oil prices were discovered to exert a negative but statistically significant impact on the growth of the agricultural sector. However, gross domestic product was found not to have a significant relationship with the agricultural sector. On the basis of these findings, it is recommended that Nigeria government should implement stable exchange rate policies of revaluation or appreciation Nigeria currency, Nigeria government should implementing policies that can spur GDP growth rate by laying more emphasis on expanding short run economic activities that promote the development of agricultural sector, Nigeria government should increases in money supply via loans to farmers in order to expand the agricultural sector and Nigerian government should reduce relying on crude oil as sources of revenue and diversify in the agricultural products.
