INFLATION, PRICE STABILITY AND FOREIGN INVESTMENT INNIGERIA: THE NECESSITY OF FOREIGN EXCHANGE (DOLLAR)RATE UNIFICATION

ADEBISI Sunday Abayomi
Department of Business Administration
University of Lagos, Nigeria
sadebisi@unilag.edu.ng
ORCID: https://orcid.org/0000-0002-3689-0952
JAJI Serifat Olasumbo
Department of Management Sciences
University of Lagos, Nigeria
ABSTRACT
Foreign exchange rate is a significant determinant of pace of economic activities in developing countries that
depend on importation and foreign investment. This study is an investigation into the effect of foreign exchange
rate unification on inflation, price stability and foreign investment. The study adopted a survey approach.
Primary data was collected using questionnaire. The study employed PLS-SEM to examine the impact of
foreign exchange rate unification on inflation, price stability and foreign investment. The study found that
inflation, price stability and foreign investment are all influenced by exchange rate unification. The study
concludes that exchange rate unification has adverse impact on price stability, highlighting the presence of
short-term difficulties during the transition period. The study recommends that punitive measures and strict
political discipline must be exercised to check unethical practices that may undermine the primary objectives of
foreign exchange rate unification.
Keywords: Foreign exchange rate unification, inflation, foreign investment, price stability