Abstract

 This study was carried to determine the effect of exchange rate fluctuation and exchange rate stability from 1981- 2018, the OLS estimation method was used also the unit root test was carries out for the variable in order not to have a spurious result, also the cointegration test was carried out to determine if there is a long nm relationship among the variables. The objectives oft he study include to determine the impact of oil price fluctuation on exchange rate stability in Nigeria, to establish the long-run relationship between oil price fluctuation and exchange rate stability in Nigeria and to estimate the causal relationship between oil price fluctuation and exchange rate stability in Nigeria, the variables used to carry out this research are; Exchange rate, oil price. external reserve, interest rate and money supply. The study shows that Oil Price (OILP) fluctuation has a positive and significant impact on the exchange rule stability in Nigeria, there is a long nm relationship between the oil price fluctuation and exchange rate stability Nigeria, there is a bilateral causal relationship between Oil Price Fluctuation anti Exchange rate Stability, therefore, we accept the Ho which states that there is no bidirectional relationship between Oil Price Fluctuation and Exchange rate Stability. The study recommends that Nigeria government should take advantage of increases in +he price of oil and increase her external reserves and reduce exchange rate volatility Nigeria government should look for new ways to diversify the economy from dependence on oil and explore other sectors like manufacturing sector and agricultural sector to reduce volatility in the economy and the overall effect on it. Higher revenue gotten from increases in oil prices should he invested different areas of the economy the economy as the exchange rate of a country is affected by state of the economy.