Nexus between Crude Oil Prices and Exchange Rate in Nigeria

  • Adewale E. Adegoriola Fedeeal University Lafia, Nigeria
  • Musari Onimisi Aliyu Waziri Umaru Federal Polytechnic Brinin-Kebbi
Keywords: Exchange Rate, Crude Oil Prices, Nigeria


This study investigates the nexus between real crude oil price and exchange rate in Nigeria from January 1999 to December 2019. The study employed Monthly data which includes the bilateral exchange rate between Nigeria (Naira) and the United State (Dollar), and the spot price of crude oil measured in West Intermediate Price (WTI). The Johansen cointegration was explored to test the cointegrating relationship between Exchange rate, crude oil price, interest rate and external reserve. The findings show there is a longrun relationship between the variables. Meaning a 1 percent increase in crude oil price will lead to a 2.66 percent increase in naira per US dollar exchange rate. As for external reserve, a 1 percent increase will result in a 1.15 percent decrease in the exchange rate. While a 1 percent increase in interest rate will lead to a 3.75 percent increase in the exchange rate. However, it takes a 0.9 percent speed of adjustment for the equilibrium to be restored from the shortrun disequilibrium. The study, therefore, recommends that adequate measures should be taken to de-link long-run movements of the naira exchange rate from crude oil price changes due to its high volatility rate.

Author Biographies

Adewale E. Adegoriola, Fedeeal University Lafia, Nigeria

Department of Economics

Musari Onimisi Aliyu, Waziri Umaru Federal Polytechnic Brinin-Kebbi

Department of Arts and Social Sciences