Trump’s Tariff Threats Spark Global Selloff, Shake Nigeria’s Markets

Nigeria’s financial markets faced turbulence this week as renewed trade tensions, sparked by former US President Donald Trump’s fresh tariff threats, rattled global markets. The announcement of new tariffs on imports, including a blanket 10% duty and additional levies on goods from China and Mexico, sent waves of uncertainty through emerging economies, with Nigeria’s markets feeling the brunt of the volatility. The country’s bond and currency markets saw significant turbulence on Monday, as global investors retreated from riskier assets.

In response to the mounting pressure on the naira, the Central Bank of Nigeria (CBN) intervened with a substantial $124 million sale to stabilize the exchange rate, continuing its aggressive stance after a previous $197 million intervention. However, despite these efforts, the naira remained under pressure, with demand for foreign currency outstripping supply. This imbalance highlighted growing concerns about liquidity and the vulnerability of Nigeria’s financial system to external shocks.

Nigeria’s Eurobond market also suffered sharp declines, with bond prices falling by up to $5 and yields spiking to 12%. This surge in borrowing costs reflected heightened global risk aversion, which was driven primarily by geopolitical uncertainties. While Nigeria’s economic fundamentals have not drastically changed, the rising yields underscore investor nervousness about the wider economic implications of global trade tensions.

The CBN’s total intervention of nearly $321 million over a span of three days signals its commitment to mitigating short-term liquidity issues, but experts suggest that more comprehensive and transparent FX policies will be needed to reassure both domestic and international investors. As Nigeria faces rising borrowing costs and greater pressure on debt servicing, its ability to manage external financial shocks will be critical to maintaining economic stability.

Source: the sun