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Oil Price, Foreign Reserves, and Exchange Rate Nexus During COVID-19

In: Socioeconomic Dynamics of the COVID-19 Crisis

Author

Listed:
  • Philip Ifeakachukwu Nwosa

    (Federal University Oye-Ekiti)

  • Oluwadamilola Tosin Fasina

    (Federal University Oye-Ekiti)

Abstract

This chapter analyzes the nexus among oil price, foreign reserve, and exchange rate in pre-COVID-19 era and during the COVID-19 pandemic. It employs descriptive, VAR, and SVAR estimation techniques. This chapter observes that oil price, foreign reserves, and exchange rate had undergone major changes during COVID-19 compared to the pre-COVID-19 period. The VAR causality estimate showed the absence of causality among the variables in the pre-COVID-19 era, while in the COVID-19 period, the study observes unidirectional causality from oil price to foreign reserves and exchange rate and a one-way causal influence from foreign reserves to exchange rate. The impulse response function from the SVAR estimate showed that a sudden decline in oil price affected foreign reserves and exchange rate more in the COVID-19 period than in the pre-COVID-19 period. Thus, this chapter concludes that the COVID-19 pandemic had significant adverse impact on oil price, foreign reserves, and exchange rate in Nigeria. The chapter recommends that the palliative measures of the ₦50 billion CBN COVID-19 intervention program should be judiciously executed to lessen the consequences of the pandemic on households and business firms.

Suggested Citation

  • Philip Ifeakachukwu Nwosa & Oluwadamilola Tosin Fasina, 2022. "Oil Price, Foreign Reserves, and Exchange Rate Nexus During COVID-19," Contributions to Economics, in: Nezameddin Faghih & Amir Forouharfar (ed.), Socioeconomic Dynamics of the COVID-19 Crisis, chapter 0, pages 231-249, Springer.
    • Handle: RePEc:spr:conchp:978-3-030-89996-7_11
    DOI: 10.1007/978-3-030-89996-7_11
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