An Evaluation of Price Based Determinants of Nigeria’s Real Exchange Rate

31 Pages Posted: 12 Apr 2011 Last revised: 14 Apr 2011

See all articles by Emre Ozsoz

Emre Ozsoz

Fordham University - Department of Economics - Center for International Policy Studies (CIPS)

Mustapha A. Akinkunmi

Brickfield Road Associates Limited

Date Written: March 15, 2011

Abstract

By using monthly data for the 2002-2010 period, we construct two novel indices for the real Naira exchange rate. We estimate determinants of both exchange rates by using a VEC model approach. Our estimations suggest that like most commodity exporting economies, to a great extent world oil prices, level of local currency in circulation and the level of foreign reserves held by the Central Bank can be used as good predictors of the long run equilibrium real exchange rate for Nigeria. We show that increases in the world price of oil have an appreciating effect while increases in the level of currency in circulation and in the reserves are associated with a depreciation of the Naira.

Keywords: Exchange Rate Equilibrium, Nigeria, VEC estimation

JEL Classification: F31, F41

Suggested Citation

Ozsoz, Emre and Akinkunmi, Mustapha A., An Evaluation of Price Based Determinants of Nigeria’s Real Exchange Rate (March 15, 2011). Available at SSRN: https://ssrn.com/abstract=1807163 or http://dx.doi.org/10.2139/ssrn.1807163

Emre Ozsoz (Contact Author)

Fordham University - Department of Economics - Center for International Policy Studies (CIPS) ( email )

Dealy Hall 5th Floor
441 East Fordham Rd
New York, NY 10458
United States

HOME PAGE: http://www.fordham.edu/academics/office_of_research/research_centers__in/cips/

Mustapha A. Akinkunmi

Brickfield Road Associates Limited ( email )

Isheri
Ogun State
Nigeria

HOME PAGE: http://www.bra-limited.com

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
113
Abstract Views
778
Rank
439,112
PlumX Metrics