Pages: (1-11 )
Abstract
Nigeria is a mono-cultural economy that solely relies on crude oil as a major export commodity with consequences of been vulnerable to the fluctuations of oil prices through exchange rate. The study examined the impact of crude oil price fluctuations and foreign reserve on exchange rate volatility in Nigeria using monthly average data for the period of 1970 to 2018. ARCH/GARCH technique was utilized. The results showed that a 100 per cent increase in crude oil price fluctuations worsen the exchange rate by 2.22 per cent at the international market. Also a 100 per cent increase in foreign reserves, appreciate the exchange rate by 3.57 per cent. The study reiterated the rescuing capacity of foreign reserves in Nigeria to ameliorate internal shocks. Hence, we recommend that foreign exchange be properly monitored for policy implications in Nigeria.
Keywords: Crude oil Price Fluctuations, Foreign reserves, Exchange Rate Volatility,