DOES THE PARALLEL EXCHANGE RATE MATTER FOR NON-OIL EXPORTS? EVIDENCE FROM NIGERIA’S DUAL EXCHANGE RATE SYSTEM

Abstract

This study examined the impact of the parallel market exchange rate on Nigeria's
non-oil export performance using the Autoregressive Distributed Lag (ARDL) framework and
monthly data from 2008 to 2024. The ARDL bounds test confirmed a stable long-run relationship
among the variables. Empirical findings indicated that the parallel exchange rate exerted a
significant negative influence on non-oil exports, reflecting the adverse effects of currency
misalignment and market fragmentation. In contrast, the official exchange rate had a positive and
marginally significant effect, suggesting that moderate depreciation enhances export
competitiveness. The study concludes that exchange-rate stability, particularly convergence
between official and parallel markets, is critical for sustainable export growth. The study concludes
that sustainable growth in Nigeria’s non-oil exports depends less on exchange-rate depreciation
itself and more on achieving stability and convergence between the official and parallel foreign
exchange markets through coordinated monetary and exchange-rate policies.