By Springs News NG Business Desk

Abuja, Nigeria – April 4, 2025 — The Nigerian naira plunged significantly against the US dollar on Thursday, following the announcement of a new wave of global trade tariffs by United States President Donald Trump. The move triggered market turbulence and renewed pressure on oil prices and emerging economies, including Nigeria.

According to data released by the Central Bank of Nigeria (CBN), the naira depreciated by N20.75 or 1.3%, closing at N1,552.53 per dollar at the Nigerian Foreign Exchange Market (NFEM)—down from N1,531.25 recorded on Wednesday. At the parallel market, the local currency also weakened, sliding to N1,560/$1, compared to N1,555/$1 a day earlier.

The downturn came a day after President Trump announced a 10% increase in trade tariffs on several key trading partners including China and the European Union, a move analysts believe could worsen global trade tensions and dampen investor sentiment across developing economies.

In tandem with the currency depreciation, Nigeria’s gross external reserves declined by 0.3%, falling from $38.30 billion on March 28 to $38.17 billion as of April 2, 2025, further reflecting the nation’s economic vulnerability to external shocks.

Oil markets also reacted negatively. Brent crude fell as much as 3.2% to $72.52 per barrel, while West Texas Intermediate (WTI) dropped below the $70 mark, mirroring broader selloffs across global markets. Though energy commodities were not directly targeted in the new tariffs, analysts say the ripple effect of reduced global trade could suppress demand, thereby exerting downward pressure on oil—Nigeria’s main export commodity.

Trade War Escalation

Trump’s latest tariff escalation is widely seen as his most aggressive move yet in reshaping global trade policy. The new levies follow previous rounds aimed at countries such as Canada, Mexico, and China, reinforcing the former president’s long-held position that America’s trading framework disadvantages domestic industry.

Economists warn that sustained uncertainty in global trade policy could aggravate capital flight, hinder foreign direct investment, and deepen currency instability in fragile economies like Nigeria.

Implications for Nigeria

With over 90% of Nigeria’s foreign exchange earnings derived from crude oil, the combination of falling oil prices, shrinking reserves, and weakening naira poses significant challenges for monetary policy and inflation management. The Central Bank may be forced to revisit its intervention strategies or consider policy tightening to stabilize the market.

As global economic tremors continue to unfold, financial analysts advise that Nigeria strengthen its economic diversification agenda, boost non-oil exports, and ramp up domestic production to mitigate further external shocks.