ABSTRACT

This work studies the trend of crude oil exportation in Nigeria, from January 1996 through December 2000, and how it affects the naira-dollar exchange rate. There are two basic objectives of this study: Firstly, to design a mathematical model that could be used to predict future crude oil exports in the next twelve-month period. Secondly, to investigate the existence of a relationship between crude oil exports and the naira-dollar exchange rate. A model will also be developed for estimating future exchange rates, should a relation exist. The methods of simple descriptive time series analysis (using the multiplicative model) and simple correlation analysis were employed. The former was used to analyse the exportation trend, while the later was used to investigate its relationship with the naira-dollar exchange rate. The time series analysis revealed a curvilinear trend in crude oil exports, and the absence of any seasonal variation. The correlation analysis, however, affirmed that no relationship exists between crude oil exports and exchange rates. The trend was used to forecast future export values for 2001.

TABLE OF CONTENT

Title Page

Certification

Abstract iii

Appreciation iV

Acknowledgement v

Dedication vi

List of tables vii

List of graphs viii

Table of contents ix

CHAPTER ONE I

INTRODUCTION I

1.1 Background of study I

1.2 Rationale of study 3

1.3 Aims and objectives 3

1.4 Scope of work 4

1.5 Definition of concepts 4

1.6 Literature review 6

CHAPTER TWO 9

SOURCE AND FEATURES OF DATA 9

2.1 Data collection 9

2.2 Test for normality 12

2.3 Test for randomness 14

2.4 Methodology 17

CHAPTER THREE 21

ANALYSIS 21

3.1 Estimation and isolation of trend 21

3.2 Test for seasonal component 29

3.3 Test for correlation 31

CHAPTER FOUR 35

FORECASTING AND CONCLUSION 35

4.1 Forecasting 35

4.2 Summary 36

4.3 Recommendations 38

4.4 Conclusion 38

References 40