Exchange Rate Unification Policy and Economic Stability on South East Nigeria

Anikeze Nnaemeka Hillary, Chukwu Chinaza Emmanuella and Nwofor Assumpta C.

Department of Public Administration, Faculty of Management Science Enugu state university of science and Technology, Nigeria

Email:nnaemeka.anikeze@esut.edu.ng

ABSTRACT

This study examines the impact of exchange rate unification policy on economic stability in South East Nigeria, with a specific focus on how a unified exchange rate could enhance regional economic performance, reduce volatility, and promote sustainable development. Adopting an ex post facto research design, the study utilizes both qualitative and quantitative data to analyze the relationship between the average exchange rate and average domestic prices of food items and petrol on a monthly basis. The analysis spans from December 2021 to December 2024, covering both the pre-policy period (2021–2022) and the post-policy period (2023–2024), following the implementation of the exchange rate unification policy in mid-2023. Data were obtained from the Central Bank of Nigeria and the National Bureau of Statistics, particularly focusing on the monthly average exchange rates (naira to USD) and monthly inflation rates for food and petrol price. The study employs charts and graphs to illustrate the trends and relationships among the variables. Findings reveal that the exchange rate unification policy triggered a sharp depreciation of the naira, beginning in July 2023, and led to a substantial rise in inflation, especially food inflation. Food inflation surged to 24% immediately after the policy took effect and continued to rise more rapidly than general inflation. By August 2023, food inflation surpassed 35%, while inflation for all items reached 26%. The results indicate that while the unification policy aimed to stabilize the exchange rate system, contributed significantly to inflationary pressures in the South East region, disproportionately devaluing naira and affecting food prices and living costs. The study concludes that while exchange rate unification holds long-term promise for economic stability, its short-term impact in South East Nigeria has been characterized by rising inflation and a weakening domestic currency, underscoring the need for complementary fiscal and monetary policies to cushion regional economic vulnerabilities. Based on the findings the study therefore recommends. While monetary tightening may be necessary, it should be complemented with strategic fiscal policies that support production, stabilize prices, and manage public expectations. Since the effects of the exchange rate unification policy have worsened inflation and reduced purchasing power, the government should expand social welfare programs, such as food assistance, cash transfers, and subsidies for transportation.

Keywords: Exchange rate, Unification policy, Economic Stability.

CITE AS: Anikeze Nnaemeka Hillary, Chukwu Chinaza Emmanuella and Nwofor Assumpta C. (2025). Exchange Rate Unification Policy and Economic Stability on South East Nigeria. INOSR ARTS AND MANAGEMENT 11(2):11-24. https://doi.org/10.59298/INOSRAM/2025/112.1124