The Impact of Naira Redesign on Foreign Exchange Rate in Nigeria
CHAPTER ONE
Research Objectives
The main objective of the study is to examine the impact of naira redesign on foreign exchange rate in Nigeria, and the specific objectives are:
- To analyze the impact of the redesign of the Naira on the stability of the foreign exchange market in Nigeria.
- To assess the role of the Central Bank of Nigeria in managing the foreign exchange rate in the aftermath of the redesign of the Naira.
- To evaluate the effectiveness of the redesign of the Naira in improving the competitiveness of the Nigerian economy in the global market.
CHAPTER TWO
LITERATURE REVIEW
Introduction
This chapter presents the literature review of the study. This is done under various subheadings that are classified under the conceptual review, theoretical review and the summary of literature reviewed.
Conceptual Review
Concept of Currency redesign
Currency redesign refers to the process of changing the physical design or appearance of a country’s currency. This can be done for various reasons, including improving the currency’s security features, updating its design to reflect changes in the country’s political or economic landscape, or simply to give the currency a fresh look (Campenhout, 2013). Currency redesign can involve changes to the size, color, images, and denomination of the currency, as well as the addition or removal of security features such as watermarks, holograms, and serial numbers. The redesign process may also involve the issuance of new banknotes or coins and the withdrawal of old ones from circulation (Faber et, al., 2017).
It can have various effects on the economy, including changes in the exchange rate and inflation, as well as an impact on the economy’s stability and growth. Therefore, the decision to redesign a country’s currency is usually made after careful consideration of the potential economic, political, and social impacts (Campenhout, 2013). Currency redesigning has various reasons or purpose intended for it to serve. These are:
Improving security features: One of the primary reasons for currency redesigning is to improve the security features of the currency. This can include adding new anti-counterfeit measures such as holograms, watermarks, and security threads, or upgrading existing security features (Heskett, 2019).
Reflecting changes in the political or economic landscape: Currency redesigning can also be done to reflect changes in the country’s political or economic landscape. For example, a redesign can reflect the changing status of the country, such as the addition of new territories or the elimination of old ones (Hollanders, 2016).
Modernizing the currency design: Currency redesigning can also be done to modernize the currency design and give it a fresh look. This can include updating the images, colors, and overall aesthetic of the currency to make it more appealing to the public (Heskett, 2019).
Preventing counterfeiting: Currency redesigning can also be done to prevent counterfeiting. This can include the addition of new security features, as well as the removal of old, easily-counterfeited banknotes from circulation (Laakso, 2015).
Updating the currency’s denomination structure: Currency redesigning can also be done to update the currency’s denomination structure. For example, a country may choose to introduce new, smaller denominations of banknotes or coins to make transactions easier, or remove high-denomination banknotes to reduce the risk of money laundering and other illegal activities (Hollanders, 2016).
Responding to economic conditions: In some cases, currency redesigning can be done to respond to economic conditions, such as high inflation or rapid currency depreciation (Palafox, 2015). By redesigning the currency, the government can demonstrate its commitment to stabilizing the economy and restoring public confidence in the currency.
Addressing public discontent: Finally, currency redesigning can be done to address public discontent with the existing currency design. For example, the public may feel that the currency design is outdated, or that it does not accurately reflect the country’s cultural heritage. A redesign can help to address these concerns and make the currency more appealing to the public (Smolicki, 2014).
CHAPTER THREE
RESEARCH METHODOLOGY
Research Design
This study will employ an explanatory research design to collect data on the analysis of the impact of naira redesign on foreign exchange rate in Nigeria. The explanatory research design is developed with the main purpose of investigating phenomenon which had not been studied before or has not been properly explained in previous studies (Baskerville, 2015). It is targeted towards providing details about where to discover small amount of information. The research design is adopted because it explains why phenomena occur and predict future occurrences around the variables used in this research.
Research Population
The target population of the study will consist of business, and accounting personnel. Burns and Grove (2019) claimed that targeted population as a collection of personalities which are eligible to participate in the enquiry. Population may also refer to an entire group of persons or elements that have at least one thing in common. Jiang (2017) agreed that, a population is any target group of individuals that has common characteristics that are of interest to the researcher.
Sample Size
In this study, the researcher makes use of non-probabilistic sampling techniques in determining the sample size, as the research population is not known. Non-probability sampling is defined as a sampling technique in which the researcher selects samples based on the subjective judgment of the researcher rather than random selection. It is a less stringent method. This sampling method depends heavily on the expertise of the researchers. It was carried out by observation, and researchers use it widely for qualitative research. (Israel, 2014). Each member of the population has an equal chance of being selected. Data is then collected from as large a percentage as possible of this random subset. From this method, the researcher used the convenience sampling method in which samples are selected from the population because they are easily accessible. Using this method, the sample size will consist of a total of 41 respondents will be selected. A sample size is a subject of people, items, or events from a larger population that is collected and analyzed to make inferences. (Morgan, 2017).
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
Demographics details of respondents
CHAPTER FIVE
SUMMARY, CONCLUSION, AND RECOMMENDATIONS
Summary
The study investigated the impact of the redesign of the Naira on the stability of the foreign exchange market in Nigeria. The research questions aimed to examine the impact of the redesign, the role of the Central Bank of Nigeria in managing foreign exchange rate, and the effectiveness of the redesign in improving the competitiveness of the Nigerian economy in the global market. The study used a quantitative research method and found that the redesign of the Naira has not had a fully significant impact on foreign exchange rate stability in Nigeria. The Central Bank of Nigeria has a crucial role in managing foreign exchange rate, and its policies have the potential to improve the competitiveness of the Nigerian economy in the global market, although this requires further research to verify.
Conclusion
The study has drawn a conclusion the impact of the redesign of the Naira on the stability of the foreign exchange market in Nigeria. The research questions aimed to understand the impact of the redesign, the role of the Central Bank of Nigeria in managing foreign exchange rate, and the effectiveness of the redesign in improving the competitiveness of the Nigerian economy in the global market. The results of the study showed that the redesign of the Naira has not had a fully significant impact on foreign exchange rate stability in Nigeria, which suggests that other factors, such as government policies, economic conditions, and political stability, also play a role in determining foreign exchange rate stability.
The Central Bank of Nigeria was found to have a critical role in managing the foreign exchange rate in the aftermath of the Naira redesign. The bank has been implementing various policies to maintain stability in the foreign exchange market, and the effectiveness of these policies in improving the competitiveness of the Nigerian economy in the global market remains to be seen. The results of the study highlight the importance of considering a range of factors in understanding the stability of the foreign exchange market and the competitiveness of the Nigerian economy in the global market.
It is important to note that the findings of this study are not conclusive, and further research is needed to fully understand the impact of the Naira redesign on foreign exchange rate stability and the competitiveness of the Nigerian economy in the global market. This may include additional data collection and analysis, as well as the examination of other factors that may influence foreign exchange rate stability. Nevertheless, the study provides valuable insights into the impact of the Naira redesign on the foreign exchange market in Nigeria and the role of the Central Bank of Nigeria in managing foreign exchange rate.
Recommendations
Based on the findings of the study on the impact of the Naira redesign on the stability of the foreign exchange market in Nigeria, the following recommendations are made:
Further research: Further research is needed to fully understand the impact of the Naira redesign on foreign exchange rate stability and the competitiveness of the Nigerian economy in the global market. This may include additional data collection and analysis, as well as the examination of other factors that may influence foreign exchange rate stability.
Consideration of multiple factors: The study highlights the importance of considering a range of factors in understanding the stability of the foreign exchange market and the competitiveness of the Nigerian economy in the global market. Further research should aim to consider a comprehensive set of factors that influence foreign exchange rate stability in Nigeria.
Monitoring of Central Bank of Nigeria policies: The Central Bank of Nigeria was found to have a critical role in managing foreign exchange rate in the aftermath of the Naira redesign. Further research should aim to monitor the effectiveness of the bank’s policies in maintaining stability in the foreign exchange market and improving the competitiveness of the Nigerian economy in the global market.
REFERENCES
- Abubakar, A. (2014). The effects of electronic banking on growth of deposit money banks in Nigeria. European Journal of Business and Management, 6(33), 79-89.
- Akanji, O. O. (2018). The achievement of convergence in the Nigeria foreign exchange market. Bullion, 30(3), 2.
- Akpan, P. L. (2019). Foreign exchange market and economic growth in an emerging petroleum based economy: Evidence from Nigeria. Available at SSRN 1445362.
- Baillie, R. T., (2016). The foreign exchange market: Theory and econometric evidence. Cambridge University Press.
- Banuso, F. B. (2012). Cashless banking in Nigeria: Challenges, benefits and policy implications.
- Bartram, S. M., (2015). A primer on the exposure of non-financial corporations to foreign exchange rate risk. Journal of Multinational Financial Management, 15(4-5), 394-413.
- Baskerville, R., (2015). Explanatory design theory. Business & Information Systems Engineering, 2, 271-282.
- Brandt, S., (2016). Data analysis. Springer-Verlag.
- Campbell, O. A. (2016). Foreign exchange market and monetary management in Nigeria. Journal of Emerging Trends in Economics and Management Sciences, 1(2), 102-106.
