MARKET NEWS

By Abdullateef Aliyu

The global trade war is threatening naira stability following the depreciation of the currency at the close of last week.

On Friday, the naira depreciated at the official market, trading at N1,567.02 to a dollar; a day after President Donald Trump’s sweeping tariff imposition.

Apart from the baseline 10% tariff on all U.S. imports, Trump also imposed country-specific reciprocal tariffs with Nigeria’s exports to the US to now attract 14 per cent.

The new tariffs, which take immediate effect, apply to more than 50 countries. They include major trade partners like China, the European Union, India and Japan, as well as developing economies in Asia, Africa and Latin America.

The foreign exchange market responded to the announcement as the naira lost N14.49.

This represents a 0.93 per cent gain when compared to N1,552.53 per dollar recorded on Thursday.

The local currency, which opened on a positive note after the Sallah holiday gained N5.56 on Wednesday, April 2 representing a 0.36 per cent gain against the dollar.

However, the local currency slumped by 1.38 per cent on Thursday, April 3 representing a loss of N21.28.

The naira had enjoyed relative stability against the US dollar since December 2024, due to CBN’s reforms promoting transparency in the foreign exchange market.

But over the weekend, the CBN boosted liquidity with the injection of $197.71m into the market.

In a statement on Saturday, CBN’s Director of Financial Markets Department, Omolara Duke, said the apex bank has noted recent movements in the foreign exchange market between April 3 and 4, 2025, reflecting broader global macroeconomic shifts currently affecting several emerging markets and developing economies.

Duke said, “These developments were as a result of the recent announcement of new import tariffs by the United States government on imports from several economies, which has triggered a period of adjustment across global markets.

“Crude oil prices have also weakened – declining by over 12% to approximately US$65.50 per barrel – presenting new dynamics for oil-exporting countries such as Nigeria.

“In line with its commitment to ensuring adequate liquidity and supporting orderly market functioning, the CBN facilitated market activity on Friday, April 4, 2025, with the provision of US$197.71 million through sales to authorised dealers.”

“This measured step aligns with the bank’s broader objective of fostering a stable, transparent and efficient foreign exchange market. The CBN continues to monitor global and domestic market conditions and remains confident in the resilience of Nigeria’s foreign exchange framework, which is designed to adjust appropriately to evolving fundamentals.

“All authorised dealers are reminded to adhere strictly to the principles outlined in the Nigeria FX Market Code and to uphold the highest standards in their dealings with clients and market counterparties,” the official added.

There will be FX demand pressure – Analysts

Analysts at Cowrywise warned that Trump’s tariff could threaten the stability of foreign exchange market.

In a report, “The Impact of the Global Trade War on the Nigerian Market,” the Cowrywise analysts said many foreign investors who invested in emerging markets like Nigeria may be compelled to withdraw their investments due to the higher interest rates in the US.

“In essence, there may be capital outflows in emerging market economies,” the report said.

According to the analysts, “When many foreign investors liquidate their investments and exit, the stability of the foreign exchange market is threatened (i.e., there will be demand pressure on the dollar), pushing the exchange rate (FX rate) higher. Inflows from foreign investors constitute a significant portion of the country’s FX supply,” the analysts said.