FAGBEMI, Augusta Ideakheua
Department of Economics
Faculty of Arts and Social Sciences
Nile University of Nigeria.
augustafagbemi1@gmail.com
AHMED, Adamu
Department of Economics
Faculty of Arts and Social Sciences
Nile University of Nigeria
ahmed.adamu@nileuniversity.edu.ng
ABSTRACT
This study examined effects international trade in primary products (proxied by export and import in
primary products) on exchange rate. The objectives of the study were to (i) evaluate impact of selected
oil, gas and Cocoa export on exchange rate; and (ii) assess the effects of selected oil, gas and Cocoa
import on exchange rate. The study used filter sampling technique to collect data. Secondary data was
collected from the annual reports and statistical bulletin of the Central Bank of Nigeria (CBN) from
2005–2022; and analyzed using VAR models. Augmented Dickey-Fuller (ADF) tests were performed
to examine the degree of integration of the time series data for stationarity tests, unit root test, Johansen
Co-integration test, and Vector Error Correction Model were also performed as part of data preprocessing. The VECM estimate (r = 0.1752, p = 0.0043) showed that there was a significant
relationship between selected oil and cocoa export and exchange rate. The estimate (r = -0.1313, p =
0.0774) shows that the relationship between selected import and exchange rate is not significant. The
concluded that international trade (export and export) in primary products exert statistically significant
effect on exchange rate. The study thus recommends that pragmatic policy formulation should be
formulated and implemented on investments centered on international trade in primary products since
it has the potential to strengthen exchange rate in Nigeria.
Keywords: Exchange rate, international trade, primary products export, primary products import