ISSN (Online): 2455-3662 EPRA International Journal of Multidisciplinary Research (IJMR) - Peer Reviewed Journal Volume: 6 | Issue: 12 |December 2020 || Journal DOI: 10.36713/epra2013 || SJIF Impact Factor: 7.032 ||ISI Value: 1.188 2020 EPRA IJMR | www.eprajournals.com | Journal DOI URL: https://doi.org/10.36713/epra2013 265 DEMAND FOR MONEY AND THE MACROECONOMIC VARIABLES NEXUS: A NON-LINEAR FREQUENCY DOMAIN APPROACH 1* Ibrahim Sambo Farouq 1 University Sultan Zainal Abidin, Faculty of Business and Management, Gong Badak Campus, Terengganu, Malaysia., https://orcid.org/0000-0002-3731-5861 2 Nuraddeen Umar Sambo 2 Wold Bank Group, Nigeria https://orcid.org/0000-0002-3731-5861 3 Ali Umar Ahmad 3 University Sultan Zainal Abidin, Faculty of Business and Management, Gong Badak Campus, 4 Aminu Hassan Jakada 4 Federal University Dutse, Economics Department, Nigeria. Terengganu, Malaysia. 5 Sa’adatu Suleiman Sanusi 5 University Malaysia Terengganu, Computer Science Department, Gong Badak Campus, Terengganu, Malaysia. ABSTRACT This paper offers an empirical evidence on the relationship between demand for money and the key macroeconomic variables in Nigeria. The empirical analysis is from the Nigerian data which covers the period 1980 to 2019; through the use of threshold autoregressive asymmetric co-integration, and a test of causality via the frequency domain was conducted to distinguish between a temporal and the permanent causality. In the analysis we ascertain whether the influence of demand for money is by exchange rate appreciation or depreciation. We found a one-way permanent causality from the demand for money to inflation, while interest rate and money demand appear to have a bidirectional causal relationship. The paper appeal to the Nigerian government to acknowledge the worth of money demand as a crucial monetary policy instrument as well as the real exchange rate fluctuation in order to avoid the pressures of inflation emanating from an increase in the demand for money. KEYWORDS: real exchange rate, money demand, frequency domain, inflation, interest rate JEL Classification: E58 1. INTRODUCTION Money demand plays an important role in the macro-economic discourse as it influences the choice of the intermediary monetary policy goal. Monetary policy decisions conducted by central banks have an immediate impact on the supply of currency, which is always the intermediate goal in developing nations. Under the balanced presumption of the money markets, a steady demand for money guarantees the handling of