Nigerian Journal of Banking and Financial Issues (NJBFI)

Abstract

This paper analyzed the extent to which foreign exchange demand affects migration, economic growth, and inflation utilizing quarterly data from the Central Bank of Nigeria's Statistical Bulletin. Autoregressive Distributed Lag (ARDL) technique was used to analyze the data. The study showed that migration rate had significant postive relationship with demand for foreign currency (t=0.196342 and p=0.0450<0.05). Negative significant relationship was also observed between economic output product (GDP) and foreign exchange demand (t=-0.274375, p=0.0047<0.05). There was also insignificant positive relationship between the rate of inflation and foreign exchange demand (t=-0.110176,  p=0.09126<0.05). The conclusion of testing the autoregressive distributive lag model (ARDL) hypothesis is that migration rate has a positive substantial influence on Nigeria's demand for foreign currency both in the short run and the long run. This result corroborated the Japa syndrome that is currently ravaging the less developed countries, particularly in Nigeria. The study recommended for policies that would mitigate the effect currency depreciation and curb inflation, accelerate economic growth thereby reducing migration rate and ensure that foreign exchange demand channeled towards economic activities.