IMPACT OF EXCHANGE RATE MOVEMENTS ON GROSS PROFIT MARGIN (GPM) OF LISTED COMPANIES IN NIGERIA

Abstract

The interplay between exchange rates and firm performance is complex, with the exchange rate movements impacting company’s gross profit margins. In developing economies, exchange rate policies are often contentious, requiring structural adjustments that may entail devaluation of the exchange rate. This study examines the Impact of Exchange Rate on Gross Profit Margin (GPM) of Listed Companies in Nigeria. The study examined the connection between exchange rate movement and profit margin using two appropriate data sets. The eight-year (2016–2023) Central Bank of Nigeria bulletin, which covers 32 quarters, and the quarterly financial reports of the firms selected on the Nigerian Exchange (NGX) between the 2016–2023 financial year were used. Four (4) Nigerian Exchange (NGX) sectors were used in the study. The study found out that Exchange Rate Movements have significant impact on Gross Profit Margin of listed companies in Nigeria. The findings reveal a significant negative relationship between exchange rate movements and gross profit margin, have a profound impact on the profitability of listed companies in Nigeria. The study's outcome suggests that a unit change in exchange rate movements lead to a corresponding change in gross profit margin, highlighting the importance of exchange rate movements in influencing profitability. Additionally, investors should consider exchange rate movements when making investment decisions in the Nigerian market.