ECONOMIC EFFECT OF INFLATION AND EXCHANGE RATE FLUCTUATION ON PERFORMANCE OF OIL AND GAS SECTOR IN NIGERIA

One of the goals of the Nigerian government is to have a stable currency rate. However, despite devaluation to encourage exports, the country failed to achieve this aim, which in-turn affects the Nigerian oil and gas industry. Also, inflation discouraged saving and crowded out investment, which might have a detrimental impact on Nigeria's oil and gas prices as well as productivity. Therefore, this study examined inflation, exchange rate fluctuation, and performance of oil and gas sector in Nigeria. Ex-post facto research design was employed by the study. Secondary source of data was adopted by the study while the data was extracted from CBN Statistical Bulletin. The study covered a 34-year period, from 1991 to 2024. The data gathered was analyzed with the use of descriptive statistics, correlation and regression analysis. The regression results revealed that consumer price index (β = 0.978479, P = 0.0000 < 0.05) has positive and significant effect on Nigerian oil and gas output, while exchange rate (β = -1.183260, P = 0.0044 < 0.05) has a negative and significant effect on Nigerian oil and gas output. Therefore, this study concluded that exchange rate and consumer price index be can relied upon to forecast performance (measured by oil and gas output) of Nigerian oil and gas sector. The study recommended that the government’s effort should be geared towards maintaining stable and sustainable exchange rates, since the stability of this would significantly enhance oil and gas output, as revealed by the study’s findings.