Ude Damian K., Anochie Uzoma C.
Abstract: Government in many developing countries use exchange rate as an instrument for stabilization purposes. This is particularly so for imported commodities and those produced within an economy whose intermediate inputs and raw materials depend heavily on import. This study formulated multi-linear regression models to empirically investigate the impact of exchange rate pass-through on monetary policy and price stability in Nigeria using quarterly data from 1986: 1 through 2012: 4. Results show that there is complete exchange rate pass-through response with selected monetary policy variables except for interest rate. However, incomplete exchange rate pass-through was found with price stability in Nigeria. It is therefore recommended that there is the need for monetary policy authorities in Nigeria to elect for appropriate exchange rate regime and other monetary policy instruments to be able to stabilize prices with monetary policy variables in Nigeria.
Keywords: Exchange rate, Monetary policy, Price stability, Pass-through, Regime