Macroeconomic Strategies for Nigeria's Agenda 2050: Assessing the Role of Exchange Rate Thresholds in Shaping Investment and Price Stability.

Abstract

: This study examines the role of exchange rate thresholds in shaping long-term macroeconomic outcomes within the framework of Nigeria's Agenda 2050, concentrating more on investment performance and price sustainability. Using robust computational econometric framework that are tailored to regime-based threshold regression, the GARCH-EVT-Copula model and Monte Carlo simulations, the research analyzes historical data from 2000-2025 and projects outcomes through 2050. Accordingly, empirical results show significant non linearities such that exchange-rate depreciation contributes to growth up to specific thresholds. At the point of crossing the respective thresholds of ₦486.75 (USD/NGN), ₦542.32 (EUR/NGN), ₦385.41 (CAD/NGN), and ₦372.63 (AUD/NGN), a noticeable downgrade of the investment rate has been observed. It is simulated and believed that at least a 4-5% decrease exists in the investment-to-GDP ratio by 2050 if these limits are breached, interpretation of which would indicate a deteriorating investment climate. Furthermore, concurrent breach across all these currency pairs could result in quarterly inflation movements of 20-25% towards the mid-2030s, being significantly higher than the Central Bank of Nigeria's 6% target. Recent forecasts suggest that depreciation of USD/NGN exchange rates could continue until about 2029, their crossing having the potential for snowballing effects that lead to inflation and decreased business activity. While losses projected for CAD/NGN and AUD/NGN rates looked minimal in comparison, they seemed to have marginally exceeded their threshold levels as of mid 2030. Value-at-Risk (VaR) show that USD/NGN and EUR/NGN markets present significantly greater downside risks compared to CAD/NGN and AUD/NGN, an unavoidable reminder of Nigeria's heightened exposure to currency-induced financial instability in a scenario with high inflation. These findings strengthen the case for integration of exchange rate threshold management in Nigeria's macroeconomic agenda under Agenda 2050 to ensure price stability, sustain growth of investments and overall long-term economic resilience. The study concludes that any potential achievement of the vast Agenda 2050 targets requires a more threshold-conscious monetary policy to avert any future inflationary spirals, sustain the necessary capital formation so urgently demanded for long-term economic prosperity