Nigeria’s Financial Markets in Turmoil as Trump Tariffs Trigger Global Shockwaves
Nigeria’s financial markets are grappling with volatility amid global disruptions caused by renewed tariff threats from former U.S. President Donald Trump. On April 7, 2025, the bond and currency markets in Nigeria experienced significant turbulence as a result of broader market declines. The Central Bank of Nigeria (CBN) intervened aggressively, selling $124 million in foreign exchange to stabilize the naira, following a previous $197 million intervention. Despite these efforts, the naira continues to face pressure as market demand drives exchange rates higher.
The sovereign debt market, particularly Nigeria’s Eurobonds, also saw sharp declines. Prices for Eurobonds plummeted by up to $5, and yields surged to 12%, signaling increasing borrowing costs for the government. Analysts suggest the sell-off, fueled by heightened global risk aversion, could complicate Nigeria’s access to international debt markets in the near future. The market reactions are largely driven by concerns over external factors, particularly the global economic uncertainty triggered by new trade tariffs.
Global markets, rocked by Trump’s proposed tariffs, experienced severe declines. Major international stock indices, such as the S&P 500 and Nasdaq, dropped significantly, and Asian and European markets faced massive sell-offs. The announcement of 10% tariffs on imports, along with specific duties on goods from China and Mexico, sparked fears about trade disruptions, inflation, and economic instability. Investors have responded with widespread panic, exacerbating the challenges for emerging markets like Nigeria.
In response to these pressures, Nigeria’s policymakers are facing a critical test. The CBN’s interventions, totaling nearly $321 million in three days, reflect efforts to manage liquidity gaps and prevent market panic. However, analysts suggest that beyond monetary interventions, clearer communication from the central bank regarding a sustained foreign exchange strategy will be necessary to stabilize the markets. With rising bond yields and increasing debt service costs, Nigeria may face challenges in securing external financing for its fiscal goals in the coming months.
Source: Naira metrics