The Spot and Forward Market Transactions and Economic Development in Nigeria

Abstract

This paper examined the impact of the spot and forward market transactions on economic development in Nigeria. Specifically, it sought to establish the relationship that exists between the spot and forward market transactions, exchange rates, inflation rates, real gross domestic product (GDP), and external reserve position in the country. Through desk and descriptive research methods, it was possible to establish high fluctuating tendencies in the spot market transactions leading to rising exchange rates in the other form of foreign exchange operations. The rising exchange rates exerted a serious negative influence on economic development in the country as indicated by the deteriorations in the GDP growth rates and the external reserves positions. To this end, it was recommended among others that the monetary authorities should monitor the market closely to detect unfavorable fluctuations and intervene in time to harmonize the spot rates with economic realities on the ground to facilitate the availability and flow of the needed foreign exchange for optimum utilization that could lead to economic development in the country