Exchange Rate Policy and Falling Crude oil Prices: Effect on the Nigerian Stock Market

Authors

Terfa W. Abraham, National Institute for Legislative Studies (NILS), AbujaFollow

Keywords

Crude Oil Prices, Stock Market, Exchange Rate

Abstract

This paper examines the effect of crude oil price movement on the Nigerian stock market and the role of exchange rate as a plausible countercyclical policy tool. Daily data on All Share Index of the Nigerian stock market, crude oil prices and exchange rate, were collected for two periods: 2008-2009 and 2012-2015. Results from the Autoregressive Distributed Lag (ADL) model show that oil prices are positively related with the performance of the Nigerian stock market thus would drag the market down in times of turmoil. Howbeit, devaluation of the naira is found to be effective in cushioning the effect of crude oil price decline on the stock market. Results from the granger causality test, however, suggest that this policy measure may not be potent as expected.

Author Bio

Dr. Terfa Williams Abraham is a Research Fellow (Economist), with the National Institute for Legislative Studies (NILS), Maitama, Abuja. Email: Lorenzcurve@yahoo.com Mobile: +234 806 209 1306

Publication Title

CBN Journal of Applied Statistics

Issue

1(a)

Volume

7

Recommended Citation

Abraham, Terfa W. (2016) "Exchange Rate Policy and Falling Crude oil Prices: Effect on the Nigerian Stock Market," CBN Journal of Applied Statistics (JAS): Vol. 7: No. 1, Article 6.
Available at: https://dc.cbn.gov.ng/jas/vol7/iss1/6