Nigeria’s financial markets experienced a sharp downturn as the naira and equities fell in reaction to a military threat against the country made by United States President Donald Trump.
The geopolitical tension erupted over the weekend when President Trump, using his Truth Social platform, designated Nigeria a “country of particular concern” and directed the US Department of War to prepare for “possible action” over alleged religious persecution, which he described as a “Christian genocide.”
The impact on the markets was immediate and pronounced. Data from the Central Bank of Nigeria revealed that the naira depreciated to N1,436.34/$, a 1.03 per cent loss from its recent peak. The currency also weakened in the parallel market, trading at N1,455/$
At the Nigerian Exchange Limited, the All-Share Index dropped by 0.25 per cent, closing at 153,739.11 points. This decline wiped N245.88 billion from the market, leaving the total capitalisation at N97.58 trillion.
The bearish trend was largely driven by sell-offs in major stocks such as Aradel Holdings and Access Corporation. Overall market sentiment was weak, with more declining stocks than gainers.
The negative sentiment extended to the bond market, where Nigeria’s Eurobonds were among the worst performers globally. According to reports, the average yield on the country’s dollar-denominated bonds rose by 5 basis points to 7.70 per cent.
Analysts offered mixed perspectives on the market’s reaction. Tilewa Adebajo, Chief Executive Officer of CFG Advisory, described the slump as a temporary “blip,” pointing to recovering global prices and Nigeria’s recent removal from the FATF Grey List as reasons for long-term confidence.
In contrast, Dr Musa Yusuf, CEO of the Centre for the Promotion of Private Enterprise, issued a strong warning. He stated that the US President’s threat was “unwarranted, counterproductive, and economically destabilising,” and that such remarks severely undermine investor confidence and heighten risk perceptions. He advocated for a path of diplomacy and mutual respect over coercion.
As the situation develops, market stability is expected to depend heavily on forthcoming diplomatic responses from the Nigerian government and consistent macroeconomic management from its financial authorities.
Discussion about this post