CHAPTER ONE

INTRODUCTION

1.0 BACKGROUND OF STUDY

The historical development of international trade can be traced to the period of World War 1 (1914 – 1918). Although world trade was heavy during World War I in the early 30s (1930’s) world trade around declined significantly as economic conditions around the world is depressed. The action of individual government accelerated the drop in level of world trade. World War II stimulate trade and in the immediate post war period the long run trend has towards a relaxation of barriers.

International financial developments are having an increase effect on people because all parts of the world are now closely linked together than ever, before communication throughout the world take place within a second.

Trade and other economic contact between nations have expanded greatly in modern time. The movement of commodities often over great distances, has made available many articles which could not be enjoyed and has raised standards of living. Thus, international trade are having both a greater amount and a greater variety of goods to consume now.

The growth of international transaction has gone hand in hand with technological improvement in production and with the development of transportation. Those advances have made possible the increase in the volume and variety of goods produced and traded. Before oil exploration started in 1958, Nigeria was a net exporter of some palm kernel, groundnut, rubber etc. Nigeria has about 72% of its total working population engaged in agricultural sector. As a matter of fact, export declined 75.3210 in 1960 to 3.6 percent in 1982 to 2,048 billion in 1982 (first bank business and economic promotion has been an important cornerstone of the structural adjustment programme (SAP) aimed at regretting the Nigeria Economy.

This foretold the coming of a new era of economic property for this nation in which export revenues will be as much from many other sources as from oil whose price fluctuate in the world market which became a nightmare for all those who plan the economy.

The need for international trade cannot be over emphasized. The economies of the world have become so complex that no nation can afford to in anarchy or isolation. There is every need for not equally endowed in nature, countries require interacting exchanging resources with one another economic co-operation among nation is indispensable.

1.2 STATEMENT OF THE PROBLEM

The foreign suggests that exchange rate risk at it affects the importer is one that is enough to hinder development in the country thereby defeating laudable objectives of government.

The “Remittance lag” problem has far reached economic implications for the business risk to worry about in the international trade transactions. The questions that this project addressed are:

1. Who bears the burden to delay interest on money transaction caused by “remittance lag”.
2. How can we achieve exchange rate stability.

iii. And to know if there is any impact in exchange rate on international trade.

1. Also to determine the possible method by which risk associated with exchange rate fluctuation can be minimized and to discover whether government importers are given preferential treatment as regards the remittance of funds.
2. What range of fluctuation is consistent with the underlying fundamentals and hence acceptable?
3. What policy tools can be effectively deployed to keep rate within those ranges.

vii. Should the range be decided in advance?

viii. Should they be announced to keep secretly or should they be simply applied in an adhoc manner.

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