Accounting for the Effects of Oil Prices on Exchange Rate in Nigeria: Empirical Evidence from Linear and Non-Linear ARDL Models

This study empirically examines the impact oil prices on exchange rate in Nigeria. Time series annual dataset spanning 1980 to 2018 was estimated using linear and nonlinear ARDL model developed by Pesaran Shin, (1998) & Pesaran, et al. (2001) (2014); where prices, nominal rate, interest revenue serves as variables for analysis. From result of linear-ARDL models both long run short-run revealed that price has positive significant rate. Similarly, also that, short-run, depreciating effect a fall is stronger than an appreciating arise equal magnitude. This, we argue, reflects dependency economy oil. One policy implication this finding stability critical domestic currency and, hence, prices. It is, therefore, recommended authorities should focus resolving production difficulties Nigeria’s industry means reducing current volatility.