Nigerian Journal of Accounting and Finance, Volume 14, Issue 1, 2022 Website: https://www.nijaf.com.ng Email: nijafmautech@gmail.com pg64 FOREIGN DIRECT INVESTMENT AND ECONOMIC OUTPUT IN NIGERIA: THE MODERATING ROLE OF EXCHANGE RATE VOLATILITY Josephine Chinelo Ene Department of Accounting and Finance, Baze University Abuja Email: Josephine.ene@bazeuniversity.edu.ng ABSTRACT The study examined the moderating role of exchange rate on the relationship between Foreign Direct Investment (FDI) and economic output in Nigeria for a period of 10 years covering 2010 to 2019. The Autoregressive distributed lag (ARDL) approach was utilised on secondary data collected from Central bank of Nigeria statistical bulletin. Economic output was measured as gross domestic product (GDP) while exchange rate was annual official exchange rate-end period (N/US$1.00). The findings revealed a significant and negative influence of exchange rate on the relationship between foreign direct investment and GDP in Nigeria. Therefore, to aid the achievement of benefits of capital flows for sustainable development in the country, it was recommended that government should formulate a stable policy framework that would eliminate volatility in exchange rate; this will contribute significantly towards eliminating systemic risk. Keywords: ARDL, FDI, Gross economic product, Exchange rate 1. INTRODUCTION Capital importation, generally termed as “Foreign capital flow” is the bringing of funds into a country from abroad for economic activities. Foreign capital flow, according to Kester (1992), refers to transactions in financial assets between residents in a specific country and residents of different countries. It is the exchange of financial claims between residents and non-residents (Bank for International Settlements [BIS], 2009). Capital importation is a systemic and influent component in global economy. It has been acclaimed to reduce inefficient output fluctuations and global disequilibrium by reallocation of demand and expenditure (Acharya & Bengui, 2018). Moreover, in fragile state economies and developing economies, it