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The focus of this study was on the effects of unified exchange rate on trade balance in Nigeria in terms of its negative and positive shocks on the economy. The authors used quarterly data on inflation rate, exchange rate and current account balance pooled from various sources such as Central Bank of Nigeria Statistical Bulletin, National Bureau of Statistics (NBS), Global finance data, Central Bank Annual Reports and Accounts To estimate the model, the author employed Auto Regressive Distributed Lag (ARDL) technique .The result of the study indicated that Lag in current account deficit in the first, second and fourth period (CAD (1-,-2,-4)), had significant negative effect on the level of current account deficit; while lag in current account deficit in the third period (CAD (-3)) had significant positive effect on the level of current account deficit in Nigeria. Inflation rate in the first period had significant positive effect on the level of current account deficit. Exchange rate in the third and fourth period (exr(-3,-4)) had significant positive effect on the level of current account deficit. Exchange rate had significant positive effect on the level of current account deficit in Nigeria. Inflation had significant positive effect on the level of current account deficits in Nigeria in the reviewed period. Unified exchange rate in the in the reviewed period was unable improve trade competitiveness but rather raised the costs of business operation through increased costs of imports resulting cost push inflation. More importantly, current account deficits in the previous periods had serious adverse impact on current level of trade balance. Implications of the findings: It implies that expenditure switching policy was not effective on Nigeria’s economy, probably due to the country’s inability to meet the Marshall-Lerner conditions for expenditure switching policy.