The strong influence of exchange rates on investment and other macroeconomic variables makes it one of the most important phenomena in an open economy such as Nigeria. Exchange rate is one of the economic indicators which directly affect investment in Nigeria; as such its role in the overall economic objectives cannot be underestimated. The nature exchange rate has been a serious problem in developing economies like Nigeria where the naira keeps on losing its strength, thereby reducing its value and adversely affecting their trading capacity. The deregulated exchange rate system adopted by Nigeria since 1987 is one in which her foreign exchange market has really determined the naira value and the flow of funds in the foreign exchange market. This has greatly affected economic growth and living standard of people, thus making the role of exchange rate very important in investment planning. Over the years, studies have revealed that depreciation of the exchange rate has had a distorting effect on economic growth and has hindered private investment through inflation. The study examined the relationship between exchange rate and private sector investment in Nigeria using time series data that Real Gross Domestic Product (RGDP) served as proxy for growth. The result of the study revealed that there is a significant relationship between the variables. The result also showed that there is a significant relationship between Exchange Rates and Private Sector Investment in Nigeria. It was recommended that government should adopt appropriate monetary and fiscal policy in order to stabilize the exchange rate and improve on the country’s foreign exchange market. It was also suggested that having a consistent and favourable exchange rate regime will guarantee stability and growth in private sector investment. It is also recommended that a more flexible exchange rate regime is the solution to the country’s current unstable exchange rate environment which has consistently failed to enhance the desired public basic investment. 3