This paper examines the effect of exchange rate fluctuations on the Nigerian manufacturing sector during a twenty five (25) years period (1986 – 2010). The argument is that fluctuation in exchange rate adversely affects output of manufacturing sector. This is because Nigerian manufacturing is highly dependent on import of input and capital goods. The methodology adopted for this study is empirical. The econometric tool of regression was used for the analysis. The population target of this study is the total number of 25 years from (1986 – 2010) (25) annual time series as data relating to other years after 2010 are not available. The used in this study is the secondary source of data. The data to be utilized in this study we be sourced through library research, publications of the Central Bank of Nigerian (CBN) i.e. statistic bulletin, National Bureau of Statistic(NBS), on line information and economic journals. Based on the findings, the researcher found out that exchange rate has no significant effect on economic growth of Nigeria also that there is no significant effect of fluctuation on exchange rate on the manufacturing sector. Some recommendations for policy were made based on the findings. Amongst others is the need to strengthen the link between agriculture and manufacturing‟s sector through local sourcing of raw materials thereby reducing reliance of the sector on import of input to a reasonable level

Approval page i
Dedication ii
Acknowledgement iii
Abstract iv

Introduction
1.1 Background ofthe Study 1
1.2 Statement ofthe Problem 3
1.3 Objectives ofthe Study 5
1.4 Research Questions 6
1.5 Formulation of Hypothesis 6
1.6 Significant Of the Study 7
1.7 Scope and Limitations Of The Study 8
1.8 Definition of Terms 9
viii

Introduction
2.1 Review of Related Literature 10
2.2 Theoretical Concept Of Exchange Rate 18
2.3 Theoretical Frame Work for Exchange Rate Fluctuation andManufacturing Output 18
2.4 The Objectives of Exchange Rate Policy in Nigeria 20
2.5 Types of Exchange Rate 23
2.6 Factors Affecting Rate Of Exchange 25
2.7 Fluctuation inThe Exchange Rate Of The Naira 26
2.8 Factors Influencing TheDetermination Of Exchange Rates 27
2.9 Factors That Can Affect The Manufacturing Process 29
2.10 Factors That Causes The Currency Fluctuation 33
2.11 Manufacturing Sector 36
2.12 Overview of Manufacturing 49

Introduction
3.1 Research Methodology 64
3.2 Research Design 65
3.3 Source of data 65
3.4 Research Instrument 66
3.5 Reliability And Validity Of Research Instrument 66
3.6 Population Of The Study 66
3.7 Sample And Sampling Procedure 67
3.8 Method Of Data Analysis 67
3.9 Decision Criterion For Validation Of Hypothesis 70

Introduction
4.0 Presentation and Analysis of Data 71
4.1 Presentation of Results 72
4.2 Results 73

Summary ofthe Findings, Conclusion and Recommendations
5.1 Summary ofthe Findings 77
5.2 Conclusion 78
5.3 Recommendation 79
BIBLIOGRAPHY 81
APPENDIX

INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Following the fluctuation of the naira in 1986, a policy induced by the structural adjustment programme (SAP), the subject of exchange rate fluctuation has become a topical issue in Nigeria. This is because it is the goal of every economy to have a stable rate of exchange with its trading partners. In Nigeria, this goal was not reached in spite of the fact that the country embarked on devaluation to promote export and stabilize the rate of exchange. The failure to realize this goal subjected the Nigerian manufacturing sector to the challenge of a constantly fluctuating exchange rate.