Acta Universitatis Danubius. Œconomica, Vol 15, No 6 (2019)

Investigating Oil Prices and Exchange Rates Nexus in Nigeria: ARDL Approach

Mathew Ekundayo Rotimi, Ojo Johnson Adelakun, David Babatunde


This paper examined the long-run association of real exchange rates, real oil prices, interest rate, inflation and external debt in Nigeria. It used monthly data for the period, 1980-2017. The model employed in the study started with testing for the existence of unit roots which were found to be combination of orders I(0) and I(1), fulfilling the ARDL condition. Also, using various cointegration tests, the study reveals that cointegration exists among the selected variables. The granger causality test found that oil price positively and significantly impacted exchange rates in Nigeria, suggesting that a rise in global oil prices resulted into exchange rate appreciation. In a similar way, increases in oil prices triggered inflation. In view of this, it is suggested that appropriate policy measure be considered during oil price increases to mitigate unfavourable movement in exchange rates.


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