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Exchange Rate Fluctuations, Oil Prices and Economic Performance: Empirical Evidence from Nigeria

Author

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  • Augustine C. Osigwe

    (Nigerian Institute of Social and Economic Research (NISER), Nigeria.)

Abstract

The dominance of oil in the Nigeria s external sector and as its major source of revenue is not in dispute. This therefore necessitates the need to probe the nexus and the magnitude of the effects of fluctuation in the exchange rate on oil price and on how it impacts the Nigeria s economic performance. Against this background, this study evaluated the effects of exchange rate fluctuations on crude oil price as well as on economic performance, simultaneously. The ordinary least square and the two stage least squares estimation techniques were employed. The study found that real exchange rate has a positive effect (1.2%) on the Nigeria s economic performance. We also found that a 1% increase in the price of oil would positively influence the economic performance of Nigeria by the magnitude of 4%. The R2 shows that 82% deviation in the gross domestic product was captured by the explanatory variables whereas the J-statistics of the model is insignificant, thus, confirming the relevance and validity of the instruments used.

Suggested Citation

  • Augustine C. Osigwe, 2015. "Exchange Rate Fluctuations, Oil Prices and Economic Performance: Empirical Evidence from Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 5(2), pages 502-506.
    • Handle: RePEc:eco:journ2:2015-02-14
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Agya Atabani Adi & Samuel Paabu Adda & Amadi Kingsley Wobilor, 2022. "Shocks and volatility transmission between oil price and Nigeria’s exchange rate," SN Business & Economics, Springer, vol. 2(6), pages 1-17, June.
    2. Ebenezer Olamide & Kanayo Ogujiuba & Andrew Maredza, 2022. "Exchange Rate Volatility, Inflation and Economic Growth in Developing Countries: Panel Data Approach for SADC," Economies, MDPI, vol. 10(3), pages 1-19, March.
    3. Wesseh, Presley K. & Lin, Boqiang, 2018. "Exchange rate fluctuations, oil price shocks and economic growth in a small net-importing economy," Energy, Elsevier, vol. 151(C), pages 402-407.
    4. Hussaini Umaru & Aguda Niyi A. & Nordiana Osagie Davies, 2018. "The Effects of Exchange Rate Volatility on Economic Growth of West African English-Speaking Countries," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 8(4), pages 131-143, October.
    5. Arvian Triantoro & Muhammad Zaheer Akhtar & Shiraz Khan & Khalid Zaman & Haroon ur Rashid Khan & Abdul Wahab Pathath & Muhamad Amar Mahmad & Kamil Sertoglu, 2023. "Riding the Waves of Fluctuating Oil Prices: Decoding the Impact on Economic Growth," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 34-50, March.
    6. N. P. Ravindra Deyshappriya & I. A. D. D. W. Rukshan & N. P. Dammika Padmakanthi, 2023. "Impact of Oil Price on Economic Growth of OECD Countries: A Dynamic Panel Data Analysis," Sustainability, MDPI, vol. 15(6), pages 1-14, March.
    7. Osaretin Kayode Omoregie & Sodik Adejonwo Olofin, 2020. "Corporate Performance in Nigeria: The Effect of Oil Price and Exchange Rate Fluctuations," International Journal of Economics and Financial Issues, Econjournals, vol. 10(1), pages 170-179.
    8. Henry Okodua & Ese Urhie & Moses Akpesiri Erhi & Christiana Onyohu Hassan & Eyitemi Ayomikun Fasanu, 2022. "Oil Price Volatility and Equity Valuation of Listed Energy Companies in Nigeria: A Panel ARDL Model," International Journal of Energy Economics and Policy, Econjournals, vol. 12(5), pages 482-490, September.
    9. Sohag, Kazi & Kalina, Irina & Samargandi, Nahla, 2024. "Oil market cyclical shocks and fiscal stance in OPEC+," Energy, Elsevier, vol. 296(C).
    10. repec:oap:ijaefa:2017:p:1-13 is not listed on IDEAS

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    More about this item

    Keywords

    Exchange Rate; Oil Prices and Economic Performance;

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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