A Review of the Nigerian Floating Exchange Rate Regime and its Effect on Food Prices

This study reviews the Nigerian floating exchange rate regime and its effects on agricultural food prices. Nigeria’s adoption of a floating exchange rate regime in June 2023, shifting to a market-driven system, has significantly impacted agricultural food prices, driven by naira depreciation. This systematic review looks at how agricultural inputs affect the economy in Nigeria. Agriculture provides jobs for many and helps ensure food security. The review combines peer-reviewed articles and reports published between 2015 and 2022. It uses both qualitative and quantitative methods to understand price changes, market fluctuations, and their impacts on farmers and consumers. The review shows that when the currency loses value, it raises costs for imported inputs, contributing to a food inflation rate of 40.87% in June 2024. This situation reduces affordability since food represents 56.65% of household spending. This is the impact of the exchange rates; even lesser inflationary pressure than that produced by one rate is that of the parallel market rates. Exchange rates of a weak naira will serve the interest of commodity exportation like cocoa. This also assists in reducing profitability of small holder farmers due to the high cost of production. The Central Bank of Nigeria, for its part, has instituted the injections of cash into the foreign exchange to as much as 360 million dollars and introduced the Electronic Foreign Exchange Matching System. All of this is intended to eliminate volatility in the market. There are some issues which are not addressed by the current methodologies of data collection and organisational structure. The two general recommendations as provided in the review are with the intention of building production within the country as well as building infrastructure to restrict use of foreign inputs.

Nigeria, Agriculture, Floating Exchange Rate, Food Prices

1. Adegboye, F. B., Adekunjo, F. O., & Adesina, A. O. (2020). Food price volatility, inflationary pressure, and economic growth nexus in Nigeria: An autoregressive distributed lag approach. Croatian Journal of Economic and Social Sciences, 5(2), 53–68. [Google Scholar] [Crossref]

2. Ali, I., Khan, I., Ali, H., Baz, K., Zhang, Q., Khan, A., & Huo, X. (2020). The impact of agriculture trade exchange rate on economic growth of Pakistan: ARDL and asymmetric analysis approach. Ciência Rural, Santa Maria, 50(4), 1–15. [Google Scholar] [Crossref]

3. Alli, W. (2025, January 20). Naira stability cools off imported inflation to five-year low. BusinessDay. https://businessday.ng/economy/article/naira-stability-cools-off-imported-inflation-to-five-year-low/ [Google Scholar] [Crossref]

4. Asue, E. A., & Ikyaator, J. V. (2023). External debt pass-through to inflation in Nigeria. CBN Journal of Applied Statistics, 14(2), 103–135. https://doi.org/10.33429/Cjas.14223.3/5 [Google Scholar] [Crossref]

5. Bada, A. S., Olufemi, A. I., Tata, I. A., Peters, I., Bawa, S., Onwubiko, A. J., & Onyowo, U. C. (2016). Exchange rate pass-through to inflation in Nigeria. CBN Journal of Applied Statistics, 7(1), 49–70. [Google Scholar] [Crossref]

6. Central Bank of Nigeria [CBN]. (2021). Understanding monetary policy series 8: Exchange rate management in Nigeria. https://acentdfb.abu.edu.ng [Google Scholar] [Crossref]

7. Central Bank of Nigeria [CBN]. (2024). Inflation rates (per cent). https://www.cbn.gov.ng/rates/inflrates.asp?year=2024 [Google Scholar] [Crossref]

8. Dangiwa, M., Abdulkarim, A., & Audu, A. (2024). Empirical analysis of the effect of devaluation of naira on the livelihood of households in Kaduna North Local Government Area, Nigeria. Journal of Economic Studies, 21(2), 97. [Google Scholar] [Crossref]

9. Demirkılıç, S., Özertan, G., & Tekgüç, H. (2022). The evolution of unprocessed food inflation in Turkey: An exploratory study on select products. New Perspectives on Turkey, 67, 57–82. https://doi.org/10.1017/npt.2022.9 [Google Scholar] [Crossref]

10. Eregha, P. B. (2022). Asymmetric response of CPI inflation to exchange rates in oil-dependent developing economy: The case of Nigeria. Economic Change and Restructuring, 55(2), 1091–1108. [Google Scholar] [Crossref]

11. Ibrahim, T. R., Akinbobola, T. O., & Ademol, I. J. (2017). Exchange rate reform policies and trade balances in Nigeria. KCA Journal of Business Management, 8(1). https://doi.org/10.4314/kjbm.v8i1.2 [Google Scholar] [Crossref]

12. Ikuemonisan, E. S. (2024). Challenges and strategies in Nigerian agribusiness entrepreneurship for sustainable development. CABI Agriculture and Bioscience, 5, 115. https://doi.org/10.1186/s43170-024-00303-5 [Google Scholar] [Crossref]

13. IMF. (2023). Food insecurity in Nigeria: Food supply matters (Selected Issues Papers No. SIP/2023/018). [Google Scholar] [Crossref]

14. Isibor, A., Olokoyo, F., Arogundade, M., Osuma, G., & Ndigwe, C. (2018). Exchange rate management and sectoral output performance. International Journal of Supply Chain Management, 7(5), 129–134. [Google Scholar] [Crossref]

15. Israel, K. E., & Charity, G. (2024). Food inflation and the Nigerian economy: An empirical investigation. International Journal of Research and Innovation in Social Science (IJRISS), 8(11), 3455–3465. https://doi.org/10.47772/IJRISS.2024.8110266 [Google Scholar] [Crossref]

16. Jaiyesimi, F. (2024, July 15). Food inflation quickens to 40.8% as garri, bread prices rise. BusinessDay. https://businessday.ng/agriculture/article/food-inflation-quickens-to-40-8-as-garri-bread-prices-rise/ [Google Scholar] [Crossref]

17. Moses-Ashike, H. (2025, March 25). How CBN policy is stabilising naira, boosting FX reserves. BusinessDay. https://businessday.ng/banking/article/how-cbn-policy-is-stabilising-naira-boosting-fx-reserves/ [Google Scholar] [Crossref]

18. Musa, N. (2021). Impact of exchange rate volatility on inflation in Nigeria. Journal of Contemporary Research in Business, Economics and Finance, 3(1), 26–38. [Google Scholar] [Crossref]

19. National Bureau of Statistics [NBS]. (2023). Annual report 2023. [Google Scholar] [Crossref]

20. Nguyen, H. N., Pham, H. A., Vo, T. K. L., & Tran, Q. K. C. (2024). Impact of exchange rate changes on export-import dynamics in Vietnam. Cogent Economics & Finance, 12(1), Article 2409415. https://doi.org/10.1080/23322039.2024.2409415 [Google Scholar] [Crossref]

21. Njoroge, S., Mugi-Ngenga, E., Chivenge, P., Boulal, H., Zingore, S., & Majumdar, K. (2023, August 8). The impact of the global fertiliser crisis in Africa. Growing Africa. https://growingafrica.pub/the-impact-of-the-global-fertilizer-crisis-in-africa/ [Google Scholar] [Crossref]

22. Nweze, C. (2025, March 24). FX market, naira, foreign reserves firm up on CBN policies. Special Report. [Google Scholar] [Crossref]

23. Nwite, S. (2025, April 5). CBN injects $197.71m to stabilise FX market as naira falls to N1,600/$ under pressure from Trump’s 14% tariff on Nigeria. Tekedia. https://www.tekedia.com/cbn-injects-197-71m-to-stabilize-fx-market-as-naira-falls-to-n1600-under-pressure-from-trumps-14-tariff-on-nigeria/ [Google Scholar] [Crossref]

24. Nwobu, A. (2025, January 30). CBN and economy: Policy options, projections. ThisDay. https://www.thisdaylive.com/2025/01/30/cbn-and-economy-policy-options-projections/ [Google Scholar] [Crossref]

25. Okechukwu, N. M., Machi, I. O., Nwokocha, A. F., Eze, C. C., Onwuka, I. N., Okechukwu, S. C., & Ekwugha, J. C. (2023). Effect of exchange rate on domestic price level in Nigeria. Asian Research Journal of Arts & Social Sciences, 21(3), 26–38. [Google Scholar] [Crossref]

26. Oseni, I. O., Adekunle, I., & Alabi, M. (2019). Exchange rate volatility and industrial output growth in Nigeria. Journal of Economics and Management, 38(4), 129–156. https://doi.org/10.22367/jem.2019.38.07 [Google Scholar] [Crossref]

27. Oyadeyi, O., Ukoli, K., Chandiramani, A., Rosas, J., Luo, J., & Oyadeyi, O. A. (2024, June 14). The cost of living crisis in Nigeria: The impact of food and commodity prices on household purchasing power and their implications for economic wellbeing. https://doi.org/10.2139/ssrn.4866006 [Google Scholar] [Crossref]

28. Oye, O. O., Lawal, A. I., Eneogu, A., & IseOlorunkanmi, J. (2018). Does exchange rate devaluation affect agricultural output? Evidence from Nigeria. Binus Business Review, 9(2), 115–123. [Google Scholar] [Crossref]

29. Ozili, P. K. (2024). Exchange rate unification in Nigeria: Benefits and implications. Munich Personal RePEc Archive (MPRA). https://mpra.ub.uni-muenchen.de/120441/1/MPRA_paper_120441.pdf [Google Scholar] [Crossref]

30. Ufoeze, L. O., Okuma, C. N., Nwakoby, C., & Alajekwu, U. B. (2018). Effect of foreign exchange rate fluctuations on Nigerian economy. Annals of Spiru Haret University. Economic Series, 18(1), 105–122. [Google Scholar] [Crossref]

31. Umaru, A., Ado, N., & Yusuf, U. (2024, June 13). Dual exchange rate systems and food inflation in Nigeria: Does unifying exchange rate matter? SSRN. https://ssrn.com/abstract=4864145 [Google Scholar] [Crossref]

32. Wiseman, T., Luckstead, J., & Durand-Morat, A. (2021). Asymmetric exchange rate pass through in Southeast Asian rice trade. Journal of Agricultural and Applied Economics, 53, 341–374. [Google Scholar] [Crossref]

33. Zakari, T. O., Bakkihs, D. T., & Asue, E. A. (2024). Exchange rate unification policy in Nigeria: Implications for international value of the naira and domestic price level. In Policy and Development Issues in Nigeria (pp. 423–442). [Google Scholar] [Crossref]

• Breeding for a Greener Future: Selective Breeding and Crossbreeding Approaches to Minimize Methane Emissions in Ruminant Livestock
• Determinants of Adoption of Post-Harvest Losses Prevention Techniques among Banana/Plantain Marketers in Lagos State, Nigeria
• Enhancing Rice Yield Prediction Using UAV-Based Multispectral Imaging and Machine Learning Algorithms
• Seed-Borne Fungi of Groundnuts (Arachis Hypogaea) and Their Management with Ginger (Zingiber Officinale) Extract In Makurdi, Nigeria
• The Influence of Landforms and Slope on Agricultural Cropping Patterns in Chhatrapati Sambhajinagar District