Abstract: The study sought to evaluate the effect of interest rate on external reserves of Nigeria. This study which originates from the master’s thesis of the author is based on a cointegration approach. The analysis was based on time series data spanning from 1981 to 2014. The findings of the study show that real interest rate is significant in determining external reserves. Therefore, the Government of Nigeria should employ measures that will ensure moderate inflation that is price stability. Strenthening of monetary policies should be the focus of the Central Bank as it plays a major role in the accumilation of external reserves.
Keywords: Interest Rate, External Reserves, Interest Rate Parity Theory, Liquidity Preference Theory.
Title: INTEREST RATE AND EXTERNAL RESERVES OF NIGERIA: A COINTEGRATION APPROACH
Author: Malgit Amos Akims
International Journal of Interdisciplinary Research and Innovations
ISSN 2348-1218 (print), ISSN 2348-1226 (online)
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