Nigeria’s Financial Markets Reel Amid Global Trade Tensions and Trump’s Tariff Shock

Nigeria’s financial markets were roiled on Monday following renewed global market turbulence, sparked by the announcement of sweeping new tariffs by former U.S. President Donald Trump. The resulting shockwaves rattled emerging markets, sending Nigeria’s bond and currency markets into disarray and adding fresh pressure on policymakers already grappling with local economic challenges.

The Nigerian naira opened the week under intense pressure in the foreign exchange market. In response to escalating demand and thin liquidity, the Central Bank of Nigeria (CBN) sold $124 million early Monday at rates between N1,595 and N1,611 per dollar. This followed a $197 million intervention on Friday, signaling a more aggressive approach by the apex bank to stabilize the currency. However, these efforts did little to stem the tide, as the naira continued to depreciate under surging demand, pointing to deeper uncertainties in the market.

In the bond market, Nigeria’s Eurobonds experienced a steep sell-off, with prices plunging by up to $5 and yields spiking to 12%—a clear signal of rising borrowing costs and heightened investor risk aversion. The rout, which began late last week, intensified as global investors dumped risk assets amid fears of a renewed global trade war. The downturn was broad-based, affecting bonds of varying maturities, and reflected more of a flight from risk than any specific deterioration in Nigeria’s economic fundamentals.

Global market panic was triggered by Trump’s announcement of a proposed 10% blanket tariff on all imports, alongside targeted duties on goods from China and Mexico. Markets responded violently. Futures tied to the S&P 500 fell 3.1%, while the Nasdaq dropped 3.4%, according to the Financial Times. In Asia, the Hang Seng Index in Hong Kong saw a dramatic 13% drop—its worst single-day performance in over two decades. European markets also crumbled, with the Stoxx Europe 600 falling 5.7%, Germany’s DAX plunging 6.4%, and the UK’s FTSE 100 losing 5.1%.

This rapid global sell-off highlights investor anxiety over the return of protectionist trade policies, with concerns about disrupted trade flows, inflation, and central bank responses fueling uncertainty. For emerging economies like Nigeria, the fallout has been swift and severe. Analysts warn that higher Eurobond yields could complicate Nigeria’s access to international debt markets at a time when the federal government is actively seeking foreign financing to bridge fiscal gaps and fund infrastructure projects.

The CBN’s recent interventions—totaling nearly $321 million in just three trading days—suggest a desire to contain panic and stabilize the market. However, financial analysts argue that short-term liquidity injections may not suffice. A more transparent and strategic foreign exchange framework may be required to restore investor confidence.

With Nigeria increasingly exposed to external shocks, the combination of global uncertainty and domestic vulnerabilities presents a stern test for fiscal and monetary policymakers alike.