Double Shocks to Trade: Exchange Rate Volatility and Pandemic Effects on Foreign Trade Flows in Nigeria
Keywords:
Exchange Rate Volatility, Pandemic, Foreign Trade Flows, Imports, Exports, ARDL, GARCH, Nigeria
Abstract
This study investigated the impact of exchange rate volatility and pandemic outbreaks on foreign trade flows in Nigeria using quarterly time series data from 1981Q4 to 2025Q1. Specifically, the study investigated the impact of exchange rate volatility and pandemic outbreak on imports and exports in Nigeria. Exchange rate volatility was estimated using the Generalized Auto-regressive Conditional Heteroskedasticity (GARCH) model, while the Auto-regressive Distributed Lag (ARDL) technique was utilized. The found that exchange rate volatility has a positive and statistically significant effect on both imports and exports in the short run at a 5% level of significance, but in the long run, the impact to exchange rate volatility on foreign trade was negative but statistically insignificant at 5% level of significance; pandemic outbreaks, proxy by COVID-19 pandemic, was found to have a negative but statistically insignificant impact on imports and exports respectively in the short run at a 5% level of significance but in the long run, the impact of the pandemic became positive but statistically insignificant at a 5% level of significance. The study concluded that although exchange rate volatility may temporarily stimulate foreign trade flows in the short run, persistent exchange rate instability poses serious long-run challenges to Nigeria’s import and export sector. The study therefore recommended that the Central Bank of Nigeria should implement policies aimed at stabilizing the exchange rate and minimizing excessive speculative activities in the foreign exchange market. The study also recommended export diversification beyond crude oil and the promotion of domestic production to reduce import dependence and strengthen Nigeria’s resilience against future global disruptions and external shocks.
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References
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Bollerslev, T. (1986). Generalized autoregressive conditional heteroskedasticity. Journal of Econometrics, 31(3), 307-327. DOI: https://doi.org/10.1016/0304-4076(86)90063-1
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Choga, I., & Mashao, T. C. (2025). The impact of exchange rate volatility on South African agricultural exports. Economies, 13(9), 247. DOI:https://doi.org/10.3390/economies13090247
De Grauwe, P. (1988). Exchange rate variability and the slowdown in growth of international trade. Staff Papers, 35(1), 63-84. DOI: https://doi.org/10.2307/3867277
Devkota, M. L. (2019). Testing the causality and cointegration between exports, imports, and exchange rates: Evidence from India. Annals-Economy Series, 1, 5-13.
Dixit, A. (1989). Entry and exit decisions under uncertainty. Journal of Political Economy, 97(3), 620-638. DOI: https://doi.org/10.1086/261619
Dornbusch, R. (1988). Exchange Rates and Inflation. MIT Press.
Duru, I. U., Eze, M. A., Saleh, A. S., Uzoechina, B. I., Ebenyi, G. O., & Chukwuka, K. (2022). Exchange rate volatility and exports: The Nigerian scenario. Asian Journal of Empirical Research, 12(1), 11-28. DOI: 10.18488/5004.v12i1.4404
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Engle, R. F. (1982). Autoregressive conditional heteroskedasticity with estimates of the variance of United Kingdom inflation. Econometrica, 50(4), 987-1007. DOI: https://doi.org/10.2307/1912773
Ethier, W. (1973). International trade and the forward exchange market. The American Economic Review, 63(3), 494-503.
Franke, G. (1986). Exchange Rate Volatility and International Trade: The Option Approach (No. 12). Diskussionsbeiträge-Serie II.
Gupta, M., & Varshney, S. (2023). Does exchange rate volatility influence import commodities of India-US? Evidence from ARDL approach. South Asian Journal of Business Studies, 12(4), 473-500. DOI: https://doi.org/10.1108/SAJBS-02-2021-0056
Heriqbaldi, U., Esquivias, M. A., Handoyo, R. D., Rifami, A. C., & Rohmawati, H. (2023). Exchange rate volatility and trade flows in Indonesia and ten main trade partners: Asymmetric effects. Studies in Economics and Finance, 40(4), 708-739. DOI:https://doi.org/10.1108/SEF- 10-2021-0451
Hooper, P., & Kohlhagen, S. W. (1978). The effect of exchange rate uncertainty on the prices and volume of international trade. Journal of mInternational Economics, 8(4), 483-511. DOI: 10.1016/0022-1996(87)90001-8
Huong, N. T. T. (2025). Impact of exchange rate volatility on green exportmargins of Vietnam: A gravity approach. Journal of International Economics and Management, 25(1), 33-46. https://doi.org/10.1108/JIEM-04-2025-0019
Inyang, N., & Effiong, U. (2021). Exchange rate effect on import volume inNigeria (1981–2019). SSRG International Journal of Economics and Management Studies, 8(2), 30-40. DOI: /doi:10.14445/23939125/IJEMS-V8I2P105
Khan, M. M. B., Du, Y., & Tahir, H. M. A. (2019). Impact of exchange rate onforeign trade of Pakistan. In Fourth International Conference onEconomic and Business Management (FEBM 2019) (pp. 69-73). Atlantis Press. DOI: 10.2991/febm-19.2019.25
Kona, V. G. (2025). Impact of exchange rate fluctuations on international business (Doctoral dissertation, National College of Ireland, Dublin).
Krueger, A. O. (1983). Exchange Rate Determination. Cambridge University Press.
Krugman, P. (1979). A model of balance-of-payments crises. Journal of Money,Credit and Banking, 11(3), 311-325. DOI:https://doi.org/10.2307/1991793
Krugman, P. R. (1978). Purchasing power parity and exchange rates: Anotherlook at the evidence. Journal of International Economics, 8(3), 397- 407. DOI:10.1016/0022-1996(78)90003-X
Kumar, M., & Begam, A. (2020). The impact of currency depreciation on exports of SAARC countries. Asian Journal of Economic Modelling, 8(1), 16-29. DOI: 10.18488/journal.8.2020.81.16.29
Lal, M., Kumar, S., Pandey, D. K., Rai, V. K., & Lim, W. M. (2023). Exchange rate volatility and international trade. Journal of Business Research, 167, 114156. DOI: https://doi.org/10.1016/j.jbusres.2023.114156
Lawal, A. M., Essien, B. E., & Gade, H. U. (2024). Dependency theory and multinational corporations in Nigeria. Journal of Public Administration, Policy and Governance Research, 2(4), 120-128.
Lawal, M., James, I., Linus, L., Yonkor, E., Kpazhin, H., & Ezeduru, E. (2025). The impact of exchange rate fluctuations on Nigeria's exportperformance. African Journal of Management and Business Research, 20(1), 376-389. https://doi.org/10.62154/ajmbr.2025.020.01030
Liu, X., Ornelas, E., & Shi, H. (2022). The trade impact of the COVID‐19 pandemic. The World Economy, 45(12), 3751-3779. DOI:https://doi.org/10.1111/twec.13279
Manda, V. K. (2025). Exchange rate volatility. In monetary dynamics and socio- economic development in emerging economies (p. 221).
Mpungose, N., & Sekome, M. (2023). Revisiting the effect of exchange rates on imports and exports in South Africa. Acta Universitatis Danubius. Œconomica, 19(4), 144-162.
Nguse, T., Oshora, B., Fekete-Farkas, M., Tangl, A., & Desalegn, G. (2021). Does the exchange rate and its volatility matter for international trade in Ethiopia? Journal of Risk and Financial Management, 14(12), 591. DOI: https://doi.org/10.3390/jrfm14120591
Orebiyi, P. A., Bassey, E. E., Udofia, M. A., & Usanga, B. F. (2025). The impact of exchange rate volatility on rice output in Nigeria. African Journal of Commercial Studies, 6(4), 55-66. DOI: https://doi.org/10.59413/ajocs/v6.i4.6
Oluyemi, O., & Isaac, E. D. (2017). The effect of exchange rate on imports andexports in Nigeria from January 1996 to June 2015. International Journal of Economics and Business Management, 3(2), 66-77.
Ouattara, Z. (2023). The impact of exchange rate volatility on international tradein developing countries: Evidence from Turkiye. PressAcademia Procedia, 17(1), 140-148. DOI: https://doi.org/10.17261/Pressacademia.2023.1767
Peştere-akçay, M., & Akçay, F. (2023). The effect of exchange rate volatility on import: Evidence from emerging markets. Ömer Halisdemir Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 16(3), 800- 810. https://doi.org/10.25287/ohuiibf.1259895
Petrylė, V. (2022). COVID-19 pandemic and export: Evidence from Lithuania. Organizations and Markets in Emerging Economies, 13(1), 139-162. DOI: 10.15388/omee.2022.13.74
Ramesh, S., Kumar, A. A., Latha, P. M., & Manda, V. K. (2026). The influence of exchange rate volatility on international trade in emerging economies. In Monetary Dynamics and Socio-Economic Development in Emerging Economies (pp. 221-252). IGI Global Scientific Publishing. DOI: 10.4018/979-8-3693-9765-7.ch008
Rojid, T., & Rojid, S. (2024). Impact of exchange rate volatility on export of small economies. International Trade, Politics and Development, 8(3), 165- 187. DOI:https://doi.org/10.1108/ITPD-08-2023-0023
Stanley, O. (2024). Exchange Rate Volatility and Exports in Uganda (Doctoral dissertation, Makerere University).
Udo, E. G., & Bassey. E. E. (2024). Governance and export growth in Nigeria. Journal of Science Education and Humanities, 8(2).95-121
Tang, W., Hu, J., Reivan Ortiz, G. G., Mabrouk, F., & Li, J. (2022). Research on the impact of COVID-19 on import and export strategies. Frontiers in Environmental Science, 10, 891780. DOI:https://doi.org/10.3389/fenvs.2022.891780
Wang, R., & Mo, Y. (2022). The impact of COVID-19 on global import and export trade. Review of Business, 42(1), 19-40.
Wanzala, R. W., Marwa, N., & Nanziri Lwanga, E. (2024). Impact of exchange rate volatility on coffee export in Kenya. Cogent Economics & Finance, 12(1), 2330447. DOI: https://doi.org/10.1080/23322039.2024.2330447
Bacchetta, P., & Van Wincoop, E. (2006). Can information heterogeneity explain the exchange rate determination puzzle?. American Economic Review, 96(3), 552-576. DOI: https://doi.org/10.1257/aer.96.3.552
Bollerslev, T. (1986). Generalized autoregressive conditional heteroskedasticity. Journal of Econometrics, 31(3), 307-327. DOI: https://doi.org/10.1016/0304-4076(86)90063-1
Central Bank of Nigeria (CBN). (2023). Central Bank Statistical Bulletin.
Cengiz, O., & Manga, M. (2022). Impact of COVID-19 pandemic on exports: New evidence from selected European Union countries and Turkey. Asia-Pacific Journal of Regional Science, 6(3), 1195-1219. DOI: https://doi.org/10.1007/s41685-022-00249-4
Choga, I., & Mashao, T. C. (2025). The impact of exchange rate volatility on South African agricultural exports. Economies, 13(9), 247. DOI:https://doi.org/10.3390/economies13090247
De Grauwe, P. (1988). Exchange rate variability and the slowdown in growth of international trade. Staff Papers, 35(1), 63-84. DOI: https://doi.org/10.2307/3867277
Devkota, M. L. (2019). Testing the causality and cointegration between exports, imports, and exchange rates: Evidence from India. Annals-Economy Series, 1, 5-13.
Dixit, A. (1989). Entry and exit decisions under uncertainty. Journal of Political Economy, 97(3), 620-638. DOI: https://doi.org/10.1086/261619
Dornbusch, R. (1988). Exchange Rates and Inflation. MIT Press.
Duru, I. U., Eze, M. A., Saleh, A. S., Uzoechina, B. I., Ebenyi, G. O., & Chukwuka, K. (2022). Exchange rate volatility and exports: The Nigerian scenario. Asian Journal of Empirical Research, 12(1), 11-28. DOI: 10.18488/5004.v12i1.4404
Effiong, C. E, Nsikhe Okon, A.N , Ene E. E, Nwanne, D.C , Osang, P.A, ,Imoke, I.D., Omini, U.U, Eduno,E.B , Okachu ,R. Nakanda E. N & Bassey, E.E. (2023).Self-concept and attitude to covid-19 preventive measures in tertiary institutions in Calabar Metropolis, Cross River State, Nigeria. Journal of Xi’an Shiyou University, Natural Science Edition, 19(9),234-259
Eje, G. C., & Ugwu, O. J. (2022). Real effective exchange rate and import ofgoods and services linkage in Nigeria: An impact analysis. InternationalJournal of Management & Entrepreneurship Research, 4(5), 232 243. DOI: DOI: 10.51594/ijmer.v4i5.319
Engle, R. F. (1982). Autoregressive conditional heteroskedasticity with estimates of the variance of United Kingdom inflation. Econometrica, 50(4), 987-1007. DOI: https://doi.org/10.2307/1912773
Ethier, W. (1973). International trade and the forward exchange market. The American Economic Review, 63(3), 494-503.
Franke, G. (1986). Exchange Rate Volatility and International Trade: The Option Approach (No. 12). Diskussionsbeiträge-Serie II.
Gupta, M., & Varshney, S. (2023). Does exchange rate volatility influence import commodities of India-US? Evidence from ARDL approach. South Asian Journal of Business Studies, 12(4), 473-500. DOI: https://doi.org/10.1108/SAJBS-02-2021-0056
Heriqbaldi, U., Esquivias, M. A., Handoyo, R. D., Rifami, A. C., & Rohmawati, H. (2023). Exchange rate volatility and trade flows in Indonesia and ten main trade partners: Asymmetric effects. Studies in Economics and Finance, 40(4), 708-739. DOI:https://doi.org/10.1108/SEF- 10-2021-0451
Hooper, P., & Kohlhagen, S. W. (1978). The effect of exchange rate uncertainty on the prices and volume of international trade. Journal of mInternational Economics, 8(4), 483-511. DOI: 10.1016/0022-1996(87)90001-8
Huong, N. T. T. (2025). Impact of exchange rate volatility on green exportmargins of Vietnam: A gravity approach. Journal of International Economics and Management, 25(1), 33-46. https://doi.org/10.1108/JIEM-04-2025-0019
Inyang, N., & Effiong, U. (2021). Exchange rate effect on import volume inNigeria (1981–2019). SSRG International Journal of Economics and Management Studies, 8(2), 30-40. DOI: /doi:10.14445/23939125/IJEMS-V8I2P105
Khan, M. M. B., Du, Y., & Tahir, H. M. A. (2019). Impact of exchange rate onforeign trade of Pakistan. In Fourth International Conference onEconomic and Business Management (FEBM 2019) (pp. 69-73). Atlantis Press. DOI: 10.2991/febm-19.2019.25
Kona, V. G. (2025). Impact of exchange rate fluctuations on international business (Doctoral dissertation, National College of Ireland, Dublin).
Krueger, A. O. (1983). Exchange Rate Determination. Cambridge University Press.
Krugman, P. (1979). A model of balance-of-payments crises. Journal of Money,Credit and Banking, 11(3), 311-325. DOI:https://doi.org/10.2307/1991793
Krugman, P. R. (1978). Purchasing power parity and exchange rates: Anotherlook at the evidence. Journal of International Economics, 8(3), 397- 407. DOI:10.1016/0022-1996(78)90003-X
Kumar, M., & Begam, A. (2020). The impact of currency depreciation on exports of SAARC countries. Asian Journal of Economic Modelling, 8(1), 16-29. DOI: 10.18488/journal.8.2020.81.16.29
Lal, M., Kumar, S., Pandey, D. K., Rai, V. K., & Lim, W. M. (2023). Exchange rate volatility and international trade. Journal of Business Research, 167, 114156. DOI: https://doi.org/10.1016/j.jbusres.2023.114156
Lawal, A. M., Essien, B. E., & Gade, H. U. (2024). Dependency theory and multinational corporations in Nigeria. Journal of Public Administration, Policy and Governance Research, 2(4), 120-128.
Lawal, M., James, I., Linus, L., Yonkor, E., Kpazhin, H., & Ezeduru, E. (2025). The impact of exchange rate fluctuations on Nigeria's exportperformance. African Journal of Management and Business Research, 20(1), 376-389. https://doi.org/10.62154/ajmbr.2025.020.01030
Liu, X., Ornelas, E., & Shi, H. (2022). The trade impact of the COVID‐19 pandemic. The World Economy, 45(12), 3751-3779. DOI:https://doi.org/10.1111/twec.13279
Manda, V. K. (2025). Exchange rate volatility. In monetary dynamics and socio- economic development in emerging economies (p. 221).
Mpungose, N., & Sekome, M. (2023). Revisiting the effect of exchange rates on imports and exports in South Africa. Acta Universitatis Danubius. Œconomica, 19(4), 144-162.
Nguse, T., Oshora, B., Fekete-Farkas, M., Tangl, A., & Desalegn, G. (2021). Does the exchange rate and its volatility matter for international trade in Ethiopia? Journal of Risk and Financial Management, 14(12), 591. DOI: https://doi.org/10.3390/jrfm14120591
Orebiyi, P. A., Bassey, E. E., Udofia, M. A., & Usanga, B. F. (2025). The impact of exchange rate volatility on rice output in Nigeria. African Journal of Commercial Studies, 6(4), 55-66. DOI: https://doi.org/10.59413/ajocs/v6.i4.6
Oluyemi, O., & Isaac, E. D. (2017). The effect of exchange rate on imports andexports in Nigeria from January 1996 to June 2015. International Journal of Economics and Business Management, 3(2), 66-77.
Ouattara, Z. (2023). The impact of exchange rate volatility on international tradein developing countries: Evidence from Turkiye. PressAcademia Procedia, 17(1), 140-148. DOI: https://doi.org/10.17261/Pressacademia.2023.1767
Peştere-akçay, M., & Akçay, F. (2023). The effect of exchange rate volatility on import: Evidence from emerging markets. Ömer Halisdemir Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 16(3), 800- 810. https://doi.org/10.25287/ohuiibf.1259895
Petrylė, V. (2022). COVID-19 pandemic and export: Evidence from Lithuania. Organizations and Markets in Emerging Economies, 13(1), 139-162. DOI: 10.15388/omee.2022.13.74
Ramesh, S., Kumar, A. A., Latha, P. M., & Manda, V. K. (2026). The influence of exchange rate volatility on international trade in emerging economies. In Monetary Dynamics and Socio-Economic Development in Emerging Economies (pp. 221-252). IGI Global Scientific Publishing. DOI: 10.4018/979-8-3693-9765-7.ch008
Rojid, T., & Rojid, S. (2024). Impact of exchange rate volatility on export of small economies. International Trade, Politics and Development, 8(3), 165- 187. DOI:https://doi.org/10.1108/ITPD-08-2023-0023
Stanley, O. (2024). Exchange Rate Volatility and Exports in Uganda (Doctoral dissertation, Makerere University).
Udo, E. G., & Bassey. E. E. (2024). Governance and export growth in Nigeria. Journal of Science Education and Humanities, 8(2).95-121
Tang, W., Hu, J., Reivan Ortiz, G. G., Mabrouk, F., & Li, J. (2022). Research on the impact of COVID-19 on import and export strategies. Frontiers in Environmental Science, 10, 891780. DOI:https://doi.org/10.3389/fenvs.2022.891780
Wang, R., & Mo, Y. (2022). The impact of COVID-19 on global import and export trade. Review of Business, 42(1), 19-40.
Wanzala, R. W., Marwa, N., & Nanziri Lwanga, E. (2024). Impact of exchange rate volatility on coffee export in Kenya. Cogent Economics & Finance, 12(1), 2330447. DOI: https://doi.org/10.1080/23322039.2024.2330447
Published
2026-06-01
How to Cite
Bassey, O., Okon, E., Ndome, J., & Elom, J. (2026). Double Shocks to Trade: Exchange Rate Volatility and Pandemic Effects on Foreign Trade Flows in Nigeria. GPH-International Journal of Business Management, 9(5), 01-28. https://doi.org/10.5281/zenodo.20488348
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Articles
Copyright (c) 2026 Ogar Gabriel Bassey, Ekanem Nsikhe Okon, Joseph Nsabe Ndome, Jacinta Onyekachi Elom
The authors and co-authors warrant that the article is their original work, does not infringe any copyright, and has not been published elsewhere. By submitting the article to GPH-International Journal of Business Management, the authors agree that the journal has the right to retract or remove the article in case of proven ethical misconduct.
