The study X-rayed the effect of exchange rate fluctuations on macroeconomic variables during the period 1970-2001. This is against the backdrop of persistent exchange rate fluctuations and comatose response of macroeconomic indices over the period under review. In order to achieve this, secondary data, which were sourced from the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC) and other relevant publications, were used. To ensure uniformity, the raw data were converted into rates or ratios and that formed an operational data(as presented in Table I). The data were analyzed using multiple regression analysis, which is patterned after the Granger causality test. The study revealed that exchange rate fluctuations are not significant factors influencing macroeconomic variables in Nigeria, except for the Level of Government Influence on the Economy (LGIE). Again, while inflation and average interest rate are significant factors influencing exchange rate fluctuations in Nigeria, external reserves and level of government influence are not. Given these findings, a triple-policy approach of institutional, structural and attitudinal changes were recommended. This, it is hoped, will enhance the value of the domestic currency and ensure the stability of macroeconomic variables as well as improve the living standard of the people.

The Nigerian economy, since independence, has undergone multidirectional metamorphosis. There have been days of joy, stagnation and crisis. In each of these days the various governments had, at one time or the other, responded to the crises of the day in its own way. While the crying days of an economy are associated with external economic imbalance [of payment disequilibrium (deficit), huge external debts, rising imports with corresponding export reduction, and so on] and internal imbalance [which includes rising inflation, growing unemployment, reduced capacity utilization rate, increasing interest rate and so on]. Obviously, no government can contend with these imbalances without severe pressure and application of policy measures. Exchange rate policy is one of such measures.

Successive Nigerian governments have adopted different exchange rate policies leading to four major exchange rate regimes since 1970. Specifically, conventional pegs (1970-77), crawling bands (1978-1985), independently floating (1986-93) and managed floating (1994- 2001) were applied with their variants by different governments. The first two regimes are fixed exchange regime while the last two are floating exchange rate regime. Exchange rate fluctuations are mainly associated with floating exchange regime, which covered the last two regimes (from 1986-2001), while 1970-1985 witnessed little or no fluctuations. Floating exchange rate regime was adopted in Nigeria with the introduction