Real Exchange Rate Movement-Misalignment and Volatility- and the Agricultural Sector: Evidence from Nigeria
Anigbogu, Theresa. U; Okoye, P.V.C; Anyanwu, Nnadozie K.; Okoli, Moses I.

Abstract
The Nigeria agricultural sector has been less impervious to external influences and most actors in the sector are near-incapacitated towards hedging against adverse shocks and uncertainty that affect the sector, especially unpredictable swings associated with price and exchange rate movements. This study X-rays the impact of real exchange rate (RER) misalignment and its volatility on the Nigerian agricultural sector from 1960 to 2010. Estimating a single-regression model via the ordinary least squares (consequently because of the poor coefficients got from the VECM model), the findings were robust and suggesting that RER misalignment and RER volatility impact negatively on agricultural production value. Moreover, appreciation of the RER inhibits the sector’s performance, while, on the contrary, financial intermediation to the sector (proxy as the ratio of agricultural bank credit to total bank credit) serves as a positive impetus to the sector. The policy implications it engenders canvasses for hedging the sector from RER movements’ risks through ensuring stability of the rate and attainment of long-run equilibrium of RER, as well as producers taking advantage of the subsidized agricultural insurance instigated by the government.

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