MODELING THE DYNAMICS OF CRUDE OIL PRICES AND ITS INTERACTION WITH EXCHANGE RATE IN NIGERIA |  Journal of Economics and Trade.

The emergence of the coronavirus epidemic, as well as the subsequent worldwide recession, has piqued researchers’ and stakeholders’ interest in how oil price dynamics affect Nigeria’s exchange rate performance. This interest stems from the tremendous volatility of the period and the failure of many countries to cope with it, leading to the economic crisis of many, including Nigeria. The global supply of commodity products and services was disrupted by the Coronavirus, which caused major markets to crash, notably the crude oil market. Oil prices fell from $67.12 per barrel on 2 January 2020 to $12.22 on 22 April 2020, and then to $40.91 on 22 October 2020, during the mild stage of the epidemic. As a result of these occurrences, this study investigates the impact of oil price dynamism on the performance and exchange rate of the crude oil market. The impulse response function, variance decomposition, and granger causality were calculated using the Toda-Yamamoto model using monthly data from 2000m1 to 2020m6. The data show that the Nigerian stock market is predominantly controlled by macroeconomic global factors. Specifically, when the price of oil becomes erratic and unpredictable, investors prefer to have cash on hand rather than invest in the market at a risky time. The data show that oil price shock, rather than oil price fluctuation, has a significant impact on the exchange rate. Furthermore, the exchange rate reacts negatively to oil price shocks but favourably to volatility in oil prices. The granger causality result, on the other hand, reveals that the control of oil price volatility on the exchange rate is not significant..

Please see the link :- https://www.ikprress.org/index.php/JET/article/view/6415

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s