Njoroge, Machupa2023-06-272023-06-272023Machupa Njoroge, . (2023). ANALYZING THE RELATIONSHIP BETWEEN INTEREST RATE AND EXTERNAL RESERVES IN NIGERIA: A COINTEGRATION APPROACH. The American Journal of Interdisciplinary Innovations and Research, 5(05), 01–03. https://doi.org/10.37547/tajiir/Volume05Issue05-01https://doi.org/10.37547/tajiir/Volume05Issue05-01http://ir-library.ku.ac.ke/handle/123456789/26002ArticleNigeria's economy is heavily reliant on the oil industry, making external reserves and interest rates crucial indicators of economic stability and development. This paper examines the long-term relationship between interest rates and external reserves in Nigeria using cointegration analysis. The study finds a significant long-term relationship between the two variables and suggests that external reserves have a causal relationship with interest rates, indicating that external reserves are a crucial determinant of interest rates in Nigeria. The findings have important implications for policymakers in Nigeria, highlighting the importance of maintaining a stable external reserve to ensure economic stability and growth.enNigeriainterest rateexternal reservescointegration analysiseconomic stabilityoil industryArticle