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

Philip Ifeakachukwu Nwosa () and Oluwadamilola Tosin Fasina ()
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Philip Ifeakachukwu Nwosa: Federal University Oye-Ekiti
Oluwadamilola Tosin Fasina: Federal University Oye-Ekiti

Chapter Chapter 11 in Socioeconomic Dynamics of the COVID-19 Crisis, 2022, pp 231-249 from Springer

Abstract: 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.

Keywords: COVID-19, Oil price; Foreign reserves, Exchange rate, SVAR; F31; I10; Q10 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-030-89996-7_11

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DOI: 10.1007/978-3-030-89996-7_11

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