The study evaluates the drivers of exchange rate fluctuations in Nigeria from 1986 to 2022. The study evaluated how variables like crude oil price, import, foreign direct investment, money supply and remittances impacted on exchange rate. The frequency of the data is quarterly, and the variables for the study were obtained from the World Development Indicators and the CBN Statistical Bulletin. Unit root tests and Bounds Cointegration tests are carried out on the study variables. The study makes use of the Autoregressive Distributed Error Correction Model for the regression analysis.

The results shows that crude oil has an insignificant effect on exchange rate in the short-run, and a significant effect in the long run, while foreign direct investment has a significant effect both in the long-run and the short-run. The study finds imports to have a short-run significant effect on exchange rate, and no effect in the long-run. Remittances impact on exchange rate only in the short-run, while money supply conversely has a long-run effect on exchange rate. The cointegrating equation denotes an adjustment speed of 8% per year in the model. The study also made key policy recommendations.