Even though oil prices are not subject to manipulations by individual countries, instability in the same generates shocks that other variables respond to, yet amid these shocks, more units of local currencies in developing countries are needed to acquire foreign inputs for production. Fluctuating oil prices consequently imply that high prices would increase the cost of production and ultimately reduce the purchasing power of industries. This study ascertains threshold effects of exchange rate devaluation and changes in oil prices on the industrial output of thirty developing countries using threshold and nonlinear autoregressive distributed lag (NARDL) regressions. Results revealed percentage rise above the devaluation threshold caused a fall in production by 4.36 percent. Oil prices within this devaluation region negatively affected output. Below and within the devaluation threshold of 0.692, the relationship patterns switch with oil price variability attracting positive and significant effects, while devaluation impacted industrial output positively with a substantial magnitude of 0.334. A higher devaluation was met with lower output in the industrial sector. In this higher region, increased oil prices weaken devaluation effects by 91.882. When a currency falls more than it is obtainable in the threshold (6.9 percent), oil prices cut output by a larger magnitude than it stimulated positively when the devaluation rate did not surpass the threshold value.

The country's strong reliance on oil and gas exports exposes it to the considerable risk of global oil market instability, as external debt continues to rise as exports fall, more attention is being paid to the consequences of this trend. The major goal of this paper is to determine Nigeria's rising external debt and declining exports, using an autoregressive distributed lag (ARDL) model, we investigated Nigeria's rising external debt and declining exports using annual time series data from 1986 to 2020. In the short run across the study period, the study reveals evidence of a negligible beneficial impact of both external debt and export on economic growth meaning that in the short run, both foreign debt and export have a negligible beneficial impact on economic growth, according to the estimates in Nigeria, in reality, in the long run, the impact is negative, with exports having a greater negative impact than foreign debt, as a result, the paper submits that Nigeria's economy is at a fork in the road, based on these findings, it is suggested that external borrowing be restricted until current debt stocks are repaid, that external loans be tied to specific projects to avoid inefficient fund allocation, that domestic capital markets be explored as an alternative to external borrowing, that more export diversification be undertaken to mitigate poor performance of primary commodity exports, and that commodity exchanges be established to attract more speculators, external borrowing should be limited until current debt stocks are serviced in order to achieve economic growth.

When an economy does well as a result of crude oil proceeds, it is expected that its financial market records a boost. So, when the economy regresses due to fluctuations in oil prices, its financial market also reacts in tandem. To shed light on the uninterrupted fluctuations, we empirically estimated the effect of changes in exchange rates and oil prices on stock returns in developing countries using the nonlinear autoregressive distributed lag (NARDL) methodology. Results reveal that a 1 percent negative shock to the exchange rate diminished returns significantly by 1.015 percent and 2.191 percent for Egypt and Nigeria respectively whereas, in Tunisia, Morocco, and Tanzania, stock returns increased significantly by 0.118 percent, 0.176 percent, and 1.145 percent respectively. For every 1 percent positive shock to exchange rates in Egypt, Nigeria, Tunisia, Morocco, and Tanzania, returns declined by 1.012 percent, 1.04 percent, 0.015 percent, 0.112 percent, and 0.214 percent respectively. A 1 percent positive shock in oil price negatively influences returns by 0.02 percent, 0.05 percent, 0.18% percent, 1.09 percent, and 0.25 percent in Egypt, Nigeria, Tunisia, Morocco, and Tanzania while a 1 percent negative shock stimulated stock returns by 1.02 percent, 0.128 percent, 0.199 percent, 1.029 percent and 0.091 percent in Egypt, Nigeria, Tunisia, Morocco, and Tanzania respectively. Different policy reaction functions should be executed differently for depreciation, appreciation, and oil price shock to enhance the favorable flow of returns in stock markets

Given that volatility influences decisions about currency rates, monetary policy, and macroeconomic policy, it is crucial to predict and anticipate volatility in emerging economies. The study employed generalized autoregressive conditional heteroskedasticity (GARCH) asymmetric models to estimate and forecast exchange rate dynamics in developing countries. We found that South Africa model had similar variance and covariance proportion of 0.99356 percent and 0.995901 percent respectively and the exchange rate could rise or fall by 2 to 6 units of rand, in exchange for USD. In Kenya, exchange rates continually exhibited steady rise monthly with extremely low mean absolute percentage error of 0.01568 percent and this demonstrates how strongly the model predicts Kenya’s future currency rates while the variance chart supports absence of persistence. In Ghana, exchange rates are projected to increase significantly as 99.5 percent of unsystematic error was un accounted for in the model. Volatility is highly persistent in Nigeria; hence the forecasting model reported a high error rate by taking 1.06 percent of the symmetric error into cognizance. Kenya, Ghana, and Mauritius had asymmetry in currency volatility, revealing turbulence in exchange rates when the bad news hit the market. Hence, local currencies are rendered worthless in the foreign exchange market.

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