Abstract

This paper considers the use of econometric techniques in estimating some of the economic indicators in Nigeria. A time series data was collected on yearly basis from 1974-2006, giving a total of 33years. Simultaneous equation model was used in estimating the stability of exchange rate. The various factors considered as affecting stability of exchange rate are imports of oil, gross domestic product, inflation rate and Total expenditure on Agriculture. From the result,it was gathered that Total expenditure on Agriculture is a good predictor of exchange rate, i.e. it contributes to the stability of a country’s exchange rate. Based on the findings, necessary recommendations were made for possible solution on how to enhance stability of exchange rate. Based on the findings, necessary recommendations were made for possible solution on how to enhance stability of exchange rate.