The purpose of the study is to determine the extent to which Foreign Exchange Rate is influenced by or associated with crude oil selling price, crude oil export and crude oil production and the direction and magnitude of their granger causalities in Nigeria oil and gas sector (2006 -2014). Data were collected from Central Bank of Nigeria Statistical Bulletin and multiple regression, correlation and granger causality approach were adopted in the analysis of data. It was found that foreign exchange rate is positively influenced by volume of crude oil export and the selling price per barrel of crude oil, though not significantly; while a weak and insignificant relationship exists between crude oil export, crude oil production and foreign exchange rate. There is no Granger Causality running from any of the explanatory variables namely crude oil export, crude oil selling price and crude oil production, to foreign exchange rate. This implies that there are other factors that exert more far reaching impact on foreign exchange rate than crude oil production, export and sales price in Nigeria. Hence, the regulatory agencies in Nigeria such as the Central Bank of Nigeria (CBN) and Securities and Exchange Commission (SEC) should strengthen other macroeconomic and microeconomic variables in other to foster a stable foreign exchange regime.
Keywords: Causality, Correlation, Foreign Exchange, OPEC, Regression, crude oil
