Nigeria’s Official Exchange Rate Crashes to N1,600/$1 as Trump Tariffs Rattle Global Markets
Nigeria’s official exchange rate crashed to N1,600/$1 at the end of trading on April 4, 2025, as Trump-era tariffs continued to rattle global markets.
Data from the Central Bank of Nigeria (CBN) shows the naira closed at N1,600/$1, marking a 1.9% depreciation compared to the N1,569/$1 recorded the previous day.
This is also the weakest level the naira has reached since December 4, 2024, when it closed at N1,608/$1. The exchange rate has now weakened by 3.9% in the first four days of April, after closing March at N1,537/$1.
What the data is saying
According to data from the CBN, the exchange rate closed at N1,600/$1 on Friday, April 4th, marking a 1.9% depreciation from the previous day.
- The intra-day highs and lows were reported as N1,625 and N1,519 to the dollar, respectively.
- The intra-day high of N1,625 is also one of the highest levels recorded this year, suggesting that traders priced the naira at significantly weaker levels.
- In contrast, the intra-day low of N1,519/$1 indicates that some traders still priced the naira stronger, possibly betting on short-term interventions.
The NFEM rate, which represents the average exchange rate, closed at N1,567, also the weakest the naira has traded this year and since December 4, 2024.
CBN Net Foreign External Reserves (NFER)
The Central Bank recently released its net external reserve position, showing that after netting off liabilities, the external reserves stood at approximately $23 billion.
- According to the CBN, the NFER rose significantly to $23.11 billion at the end of 2024, marking the highest level in over three years.
- In a press statement released on Tuesday, the bank noted this is a significant jump from the $3.99 billion recorded at the end of 2023, $8.19 billion in 2022, and $14.59 billion in 2021.
While most analysts who spoke to Nairametrics viewed this as a positive development, some expressed concern that the reserves were still not robust enough, given Nigeria’s continued dependence on portfolio inflows to shore up reserves.
- However, sources also informed Nairametrics that the apex bank was preparing a new round of foreign currency forwards, which could further boost the central bank’s reserve position.
- Foreign currency forwards were also deployed by the Emefiele-led central bank, though critics often faulted the terms, arguing they were unfavorable to Nigeria.
Sources with knowledge of the new forwards being considered also suggest the terms are more favorable to Nigeria this time.
Trump Tariffs rattle markets
United States President Donald Trump recently imposed a global tariff on all U.S. trading partners, in what he dubbed “Liberation Day.”
The decision sent global markets into a tailspin, as foreign investors sold off assets over fears of heightened uncertainty and potential reciprocal tariffs. In response, China retaliated with a 34% tariff on all U.S. imports into the country.
- The United States also imposed a 14% tariff against Nigeria, claiming the country operates a trade surplus.
- Based on Trump’s stated policy, this should have warranted a 28% tariff, but Nigeria received what Trump called a “concessionary” 14% rate.
While the tariffs are not expected to significantly affect Nigeria’s trade position with the U.S., the likely impact will be felt on the crude oil front. Nigeria relies heavily on crude oil to shore up its foreign currency earnings and thus prefers higher oil prices.
- However, crude oil prices fell below $70 per barrel for the first time this year as global markets panicked, stoking fears of a potential global recession reminiscent of the COVID-19-era downturn.
- Nigeria’s 2025 budget is based on a $75 per barrel benchmark and a daily output target of 1.8 million barrels.
Nairametrics sees a drop in crude oil prices as the most consequential threat to exchange rate stability in the near term.
