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EXCHANGE RATE VOLATILITY AND NIGERIA CRUDE OIL EXPORT MARKET
a b s t r a c t
This paper examined the effect of exchange rate volatility on Nigerian crude oil export to its trading partners (UK, USA, Italy, France, Spain, Canada and Brazil) using monthly data from the first month in 2006 (M01) to the last month in 2019 (M12). The volatility of the exchange rate was estimated using GARCH and the effect of exchange rate volatility on crude oil export was estimated using ARDL. The GARCH result shows that the exchange rates of the trading partners are volatile. The ARDL result shows that the volatility of the exchange rate of Nigeria’s trading partners is statistically significant for all the trading part- ners but with different magnitudes which means the volatility of exchange rate between Nigeria and its trading partners is very imperative in determining the volume of crude oil exportation made by Nigeria to its trading partner. The real exchange rate of the trading partners is statistically significant for all the trading partners while the income of Nigeria’s trading partners is statistically significant for 4 out of the 7 countries. The result suggests that the volatility of the exchange rate significantly influence the exportation of crude oil in Nigeria.
Keyword:
Exchange rate volatility
GARCH
ARDL
Export
Bilateral exchange rate