Exchange Rate Volatility and Import-Dependent Business Performance in Nsukka Market: A Post-2020 Analysis

Exchange rate volatility poses profound challenges for import-dependent businesses in developing economies, particularly in periods of heightened currency instability. This study analyzes the effect of exchange rate volatility on the performance of import-dependent businesses in Nsukka main market between 2020 and 2024, a period marked by significant fluctuations in the value of the Nigerian naira. The study is anchored on the Purchasing Power Parity (PPP) Theory, which predicts that changes in relative price levels between countries influence exchange rate equilibria and, by extension, the cost structures of importing businesses. A survey research design was adopted, targeting import-dependent traders in Nsukka market. From an estimated population of 2,800 such businesses, a sample of 338 respondents was drawn using stratified random sampling. Structured questionnaires and secondary exchange rate data from the Central Bank of Nigeria (CBN) were used as research instruments. Findings show that 79 percent of surveyed traders experienced margin compression exceeding 30 percent during periods of acute naira depreciation, leading to stock depletion, credit default, and reduced business scale. The study concludes that exchange rate instability is a critical impediment to the viability of import-dependent businesses in Nsukka market. It is recommended that the CBN sustain exchange rate management interventions and that businesses adopt local sourcing alternatives and forward contracts to hedge against currency risk.

Keywords: Exchange rate volatility, import-dependent businesses, purchasing power parity, Nsukka market, naira depreciation