Oil Price And Exchange Rate Volatility In Nigeria

Project and Seminar Material for Economics

Project and Seminar Material for Economics

Chapter One


1.1 Background Of Study

“There are various evidences, particularly over the post-Breton woods era, pointing to the vital role of oil price fluctuations in the determination of the path of the exchange rate” (Adeniyi et al, 2004). According to Krugman (1983), exchange rate appreciates in response to rising oil prices and depreciates with response to falling oil prices in oil exporting countries, while the opposite is expected to be the case in oil importing countries.

Volatility is the fluctuation in the value of a variable, especially price (Routledge, 2002). According to Englama et al (2010), a volatile exchange rate makes international trade and investments more difficult because it increases exchange rate risk. Exchange rate volatility tends to increase the risk and the uncertainty of external transactions and predisposes a country to exchange rate related risks (Jin, 2008).

According to Adedipe (2004), when Nigeria gained politically independence in October 1960, agricultural production was the main stay of the economy, contributing about 70% of the Gross domestic product (GDP), also employing about seventy percent of the working population and responsible for about ninety percent of foreign government revenue. The initial period of post-independence till mid – 1970s witness a fast advancement of industrialized capacity and output, as the contributions made by the manufacturing sector to GDP rose from 4.8% to 8.2%. This pattern changed when crude oil became very important to the world economy.

According to Englama et al (2010), crude oil became an export commodity in Nigeria in 1958, following the discovery of the first producible well in 1956. The contribution of oil to the federal government revenue in 1970 rose to 82.1% in 1974 from 26.3% and in 2008 constituted 83% of the federal government revenue, largely on account of increase in oil prices in the international market. The gigantic rise in oil revenue was caused by the Middle East war of 1973. It created extraordinary, surprising and unforeseen wealth for Nigeria and the naira appreciated as foreign exchange influxes offset outflows and Nigeria foreign reserves assets increased (Adedipe, 2004). The economy of Nigeria gradually became dependent on crude oil as productivity declined in other sectors (Englama et al, 2010).
Nigeria is a mono – product economy, according to OPEC statistical bulletin (2010/2011) the value of Nigeria’s total export revenue in 2010 was US$70,579 million and the revenue of petroleum exports from the total export revenue was US$61,804 million which is 87.6% of total export revenue this means that Nigeria’s economy will be vulnerable to the movements of oil prices.

During periods of favorable oil price shocks triggered by conflict in oil – producing areas of the world, the rise in the demand for the commodity by the consuming nations, seasonality factors, trading positions etc. Nigeria experiences favorable terms of trade evidenced by a large current account surplus and exchange rate appreciation. On the converse, when crude oil prices are low, occasioned by factors such as low demand, seasonality factors, excess supply, the Nigeria experiences unfavorable terms of trade evidenced by budget deficit and slow economic growth (Englama, 2010). An example was a drop in the revenue from oil exports during the global financial crisis in 2009. According to, OPEC statistical bulletin (2010/2011), oil export revenue dropped from US$74,033 million in 2008 to US$43,623 million in 2009 and the naira depreciated to N148.902 in 2009 from N118.546 in 2008.

Oil Price And Exchange Rate Volatility In Nigeria

Project Material Download

3,000 Naira

The complete material will be sent to you in just 2 steps.

Quick & Simple…

Step One Purchase

Make payment of ₦3,000: through USSD Transfer, Bank Mobile App, ATM Transfer, or POS Transfer to:

Access Bank PlcAccount No.: 0811003731
Name: Samphina Academy
Account Type: Current

Or Click Here to pay with Debit Card

Click Here to pay with Debit Card ($15)
GHANA – Make Payment of 60 GHS to MTN MoMo, 0553978005, Douglas Osabutey 


Step Two Purchase

Send the following details through Text Message or WhatsApp Messenger | +234-8143831497

  • Payment Details 
  • Email Address 
  • Oil Price And Exchange Rate Volatility In Nigeria

The complete material will be sent to your email address after receiving your payment information | T & C Apply

  Contact Our Help Desk

You may also like:

⚠️ Need a different topic? Perform a quick search

Get A Complete Business Plan For Any Business In Nigeria

Business Plan for Businesses in Nigeria

  Business Plans in Nigeria

Oil Price And Exchange Rate Volatility In Nigeria


This research material “Oil Price And Exchange Rate Volatility In Nigeria” is for research purposes and should be used as a guide in developing your research project / seminar work. For no reason should you copy word for word (verbatim) as samphina.com.ng will not be liable for any who copied the material.

The aim of providing this material is to reduce the stress of moving from one school library to another all in the name of searching for research materials. This service is legal because, all institutions permit their students to read previous projects, books, articles or papers while developing their own works. According to Austin Kleon “All creative work builds on what came before”.

samphina.com.ng is only providing this material “Oil Price And Exchange Rate Volatility In Nigeria” as a reference for your research. The paper should be used as a guide or framework for your own paper. The contents of this paper should be able to help you in generating new ideas and thoughts for your own research. Use it as a guidance purpose only.

How to defend your research work

This is a general guide on how to defend your research work:

1. Prepare For Questions:

If you are preparing for questions that may be asked during your defense, then your answers will flow smoothly and effectively. This will prove your knowledge on the subject e.g “Oil Price And Exchange Rate Volatility In Nigeria“, and strengthening your argument. Ask friends and family, read your work for them to listen to your presentation, and write down questions. You may be lucky the panel will ask you those you have already prepared on.

2. Strong Summary:

Summarizing your chapters will help keep your audience focused because it is easy for a mind to drift, so providing summaries will ensure your panel will follow along, even if they lose focus for a brief moment. Visual aides, such as graphs and power-point presentations can be very helpful. If you are going to use these, make sure you will practice your presentation with them.

3. Be Confident in Your Research Work:

Not knowing your topic “Oil Price And Exchange Rate Volatility In Nigeria” inside out will cause you to struggle and ultimately fail with your defense. You need to know the subject from every angle to ensure you are fully prepared for any question that may come your way.

4. Conclusion:

Reinforce your findings to conclude your defense. The finale of your presentation should focus on proving the work that has been done. You may need to recap on what has changed and remained unchanged, if is necessary.

5 . Listen:

Before you get defensive or recite a particular answer, make sure you truly understand the question being asked. Being a good listener is an important quality, because providing an inaccurate or off-topic answer will also weaken the validity of your paper.

Samphina Academy

Samphina Academy is an Online Educational Resource Center that is aimed at providing students with quality information and materials to aid them in succeeding in their academic pursuit.