Thursday, 14 July 2016

Implication Of Foreign Exchange Management On Global Economy Downturn In Nigerian

The need for foreign currency policy management arises only within the framework of countries engaged in international trade in contrast to a closed economy whose scope does not transact its intra country trade transactions. Foreign exchange is the means or ways of effecting payment of international transactions.


It can be acquired by a country through the expert of goods and services, direct investment in flow drawn down an external loans, aids or grants and it can also be expended on setting international obligations. It is made up of convertible currencies that are generally accepted for the

settlement of international trade and other external obligations, such currencies include those of the group of seven industrialized countries made up of united state Dollar, British Pound Sterling, Deutsche Mark, Japanese Yan, French France, Italian Lira and Canadian Dollar.



TABLE OF CONTENTS
Title page
Certification
Dedication
Acknowledgement
Table of contents

CHAPTER ONE
1.0 Introduction
1.1 Background of the study
1.2 Statement of the study
1.3 Objectives of the study
1.4 Scope of the study
1.5 Significance of the study
1.6 Statement of Research questions
1.7 Definitions of familiar terms
1.8 Organization of the study

CHAPTER TWO
2.1 Literature Review
2.2 Introduction / foreign exchange in context
2.3 Roles of CBN in foreign exchange management
2.4 Policy tools for foreign exchange management
2.5The downturn of Global financial crisis and its implications of the Nigeria Economy
2.6Global financial crisis and it’s implications on the Nigeria.

CHAPTER THREE
3.0 Research methodology
3.1 Introduction of the study
3.2 Population of the study
3.3 Data collection
3.4 Sample and sampling techniques
3.5 Limitation of the methodology

CHAPTER FOUR
4.0 Data presentation analysis and findings
4.1 Data presentation
4.2 Data analysis
4.3 Findings

CHAPTER FIVE
5.0Summary, Conclusion and Recommendation  
5.1Summary
5.2 Conclusion
5.3 Recommendations
References

CHAPTER ONE
1.0 INTRODUCTION

  • 1.1 BACKGROUND OF THE STUDY
    The foreign exchange market is the medium of interaction between sellers and buyer, of foreign exchange in a bid to negotiate a mutually acceptable price for the settlement of international transactions. The objectives of the market include the provision of all avenues for the exchange of national currencies and the creation of an effective mechanism for the allocation of foreign exchange.

Prior to independence, Nigeria’s currency was closely tried to the British pound sterling our colonial master’s currency but the currency was limited in the united kingdom where the rate of exchange was also determined.

The foreign exchange market consists of the sellers (supply) and buyers (Demand) of foreign exchange.

The money authority (central Bank of Nigeria) authorized dealers (Bank) agents of the Public sectors and the private sectors as well as correspondent bank abroad.

The supply of foreign exchange is described from oil and non-oil exports, capital receipts including draw down on loans, expenditure of foreign tourist in Nigeria, repatriator of capital by Nigeria resident broad as well as invisible receipts by the private sectors. On the other hand, the demand of foreign exchange consists of payment for imports, external debt services obligations, personal home remittances (PHR) by foreign national resident in the country, financial commitments to international organizations and the country embassies abroad, as well as other invisible out payments by the private sectors.

1.2 STATEMENT OF THE PROBLEM
An important threat to the effectiveness of foreign exchange polices and management in Nigeria is the accumulation of foreign debt whose services have been conceiving a greater proportion of the dividing forex in flow at detriment of developmental programmes which require foreign exchange for execution.
         
Inconsistency in policy formulation and implementation is another major problem. Frequent changes in minister and secretaries witnessed, change in policies and this affects performances and results. 
         
Lack of monetary and fiscal policy on part of government from 1979 to date, Nigeria has witnessed gross mis-management of resources and budget in discipline. A situation where budget is surplus and ends up in billion of naira deficit. 
         

Narrow export base and low elasticities of expert goods, protectionist policies of the industrialized nations against export goods and development of synthetics fibers seen to have jointly conspired to frustrate effort to increase earnings from export.

1.3 OBJECTIVE OF THE STUDY
The primary objectives of this research are to anaylse  the sources of the foreign exchange and proffer solution on how it can be managed effectively to achieve the set goals.
          To achieve these goals or objectives, the following objectives have been specified.
  1. a) To review the existing literature collected and collated information and sources of foreign exchange.
  1. b) To identify the sources of foreign exchange.
  1. c) To identify the various loopholes and mal-practices  in foreign  exchange management
  1. d)To analyze the way that foreign exchanges gets to the ultimate users.
  1. e) To determine the effects of foreign exchange mis-management.
  1. f) To recommend measures to be taken to improve the foreign exchange management.

1.4  SCOPE OF THE STUDY
The problems encountered in this study were multidimensional in nature.
Although, through the help of some, we are able to get most of the materials needed for the project but some staff refuse to co-operate to give necessary information, at times referring us to superior supervisors who have précised and offered the necessary assistance.
         

The rate of responses of people outside the central bank, especially the bureau de change and the black market used in this project were strictly negligible because of their uncooperative attitude and inability to understand the purpose of this project by black market operation.
         
Some black market operators believed we were tagging to gather information for the government on how to curb and referred of them while staff of bureau de change believed that we were been used by some people in the central bank as a result of which they were not prepared to have any discussion with us.

1.5 SIGNIFICANCE OF THE STUDY
The worsening balance of payment (BOP) accumulated external debt, continued commitment of greater parts of the declaiming foreign exchange ensuring to debt servicing along worsening domestic inflation and management of the foreign exchange resources to reflect and promote booth it’s human and natural resources.
         
Thus, a research into this topic is a better understanding of the issue involved in forex policy and management and offer useful propose for the benefit markets scholars and individual or corporate in using forex. 

1.6  STATEMENT OF RESEARCH QUESTIONS
  1. 1) Is exchange control an instrument of foreign exchange management?
  1. 2) Does foreign exchange get to the ultimate users?
  1. 3)Do you agree that diversification policy is a tool for foreign exchange management?
  1. 4) Does exchange control enhance the confidence in the external payment system in Nigeria?
  1. 5) Do you agree that interest rate policy is a tool for foreign exchange management in Nigeria?
1.7 DEFINITIONS OF FAMILIAR TERMS
  1. 1) Central Bank of Nigeria (CBN): It refers to a central monetary authority or an apex financial institution within the entries financial structure promoting monetary stability and a sound financial system.
The world of central bank is one of a variety of structure.
 
  1.       2) Foreign exchange: It can be define as any foreign currency that is generally acceptable for the settlement of debts, medium price of exchange and for another unit of foreign currency.
  1. 3) Exchange rate: This is the rate at which a unit of home currency exchanges for another unit of foreign currency.
  1. 4) Foreign exchange market: is the market where foreign currencies are being trailed. It permits buyer and sellers of local currencies to exchange one currency for another.
  1. 5) Balance of payment: The balance of payment is a record of transactions that took place between residents of a country including firms and the government and the rest of the world over a given period of time.
1.8     ORGANIZATION OF THE STUDY
          For ease of study and understanding this study is planned and organized into five (5) chapters.
          Chapter One comprises introduction, objectives of the study, significance of the study, plan of the study itself and problems of the study by the writer.
          Chapter  two deals with literature review, introduction or foreign exchange in context, roles of the central bank of Nigeria in foreign exchange management and the down turn of global economic on Nigeria economy.
          Chapter three will discuss, research methodology, research design, population at the study sample and  sampling techniques and methodology.
          Chapter four consists of data presentation, data analysis Hypothesis testing and findings.
          Chapter five will treat the summary, conclusion, recommendations and references. 


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