By Nwali, Elisius Idoko
The Nigeria economic prior to the period of deregulation was one characterized by increased deficit financing by the government, low external reserves and unfavourable balance of payments. The acquisition of foreign exchange of finance the importation of industrial imports poses a serious problem to the industries. The inadequacy of foreign exchange needed, led to capacity under-utilization in most developing countries. Lack of raw materials locally, led to dependency on imported raw materials. Also, differences in natural endowments of different nations necessitate importation of raw materials from countries with surplus. This study seeks to determine the extent at which foreign exchange market has helped in the growth of the Nigerian economy. It is a survey method of research with 105 as the sample size. Simple percentage was used as the method of data analyses. At the end of the study, it was found out that the use of Letters of Credit (LC) as means of financing import via foreign exchange market have increased the level of economic activities in Nigeria. Again, the Domiciliary Account Operation contributed a great deal to the level of economic activities in Nigeria. It should equally be noted that the Nigerian environment is such that does not encourage capital investment, which implies that a de-regulatory interest rate economy will not help in the growth of the economy. From the foregoing, it is crystal clear that the value of naira is comparatively weak thereby turning the economy into a cargo economy with its attendant effect on import dependency which lead primarily to huge debt, affecting socio-political environment of business in Nigeria. It is therefore, recommended that the Federal Government should remove all the subsidy on sales of foreign currencies at all level irrespective of the transaction involved as this will remove disparity between the official and parallel market rate of price without government having to intervene. The federal government should equally abolish the existence of parallel market (that is black market) by legislation and strongly implement the dictate of the law to the later on any offender without discrimination.