Naira, stocks, bonds slump on Trump’s threat to Nigeria

THE naira, stock market and other Nigerian assets fell on Monday after the markets tried dissecting United States President Donald Trump’s threat to send troops to Nigeria to eleminate terrorists allegedly murdering Christians.

Mr Trump, weekend, took two decisive decisions against Nigeria over alleged genocide against Christians and the government’s inability to contain it. He first redesignated Nigeria as a ‘country of particular concern’ and followed it up with a threat to cut off aid and invade the nation to “wipe out Islamic terrorists.”

As a result of the threat, Nigerian stocks shed N245 billion at market close on Monday, closing at 153,739.11 points. The decline was fuelled by selloffs in medium and large-cap stocks across the banking, oil & gas, and consumer goods sectors, with market market capitalisation dropping from N97.8 trillion to N97.5 trillion.

Similarly, the naira also tumbled, falling to 1,436.34/$ at the Nigerian Foreign Exchange Market (NFEM) from 1,421.73/$ on Friday. This means the local currency lost nearly N15 as investors dumped assets due to market uncertainty fuelled by Mr Trump’s threat.

Nigerian dollar bonds slumped across all maturities on Monday, ranking among the 10 worst performers in emerging markets in the morning, according to Bloomberg data. The 2047 notes led the losses, dropping as much as 0.6 cents to 88.26 cents on the dollar before trimming the decline.

Dent on consumer confidence

Nigeria’s assets have trended upwards this year on the back of the rising investor confidence, which has been fuelled by a raft of reforms initiated in 2023. The removal of petrol and foreign exchange subsidies have liberalised the markets, with the forces of demand and supply determining the price.

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The naira strengthened to 1,421.73 per dollar on Friday from 1,444.42 on Wednesday. It hit a 10-month high in the official foreign exchange market on Wednesday, as confidence rose and dollar holders sold down their positions.

The stock market neared N100 trillion market on October 22, with the NGX All Share Index crossing 153,000 points. The Debt Management Office (DMO) data data said that the five-year October FGN AUG 2030 bond cleared at 15.83 percent as against 16.00 percent in September. The seven-year FGN JUN 2032 bond cleared at 15.85 percent, from 16.20 percent a month earlier. Despite the reduction in yields, the demand remained high – demonstrating high investor confidence.

However, the sentiment may now be affected by Mr Trump’s threat and may force investors to begin repricing some of the nation’s assets, according to analysts.

Trump’s post

Mr Trump had designated Nigeria as a ‘country of concern’ and then threated to cut off aid and enter the nation to root out terrorists if the government failed to take action against the alleged Christian genocide. “If the Nigerian Government continues to allow the killing of Christians, the U.S.A. will immediately stop all aid and assistance to Nigeria, and may very well go into that now disgraced country, ‘guns-a-blazing,’ to completely wipe out the Islamic terrorists who are committing these horrible atrocities.

“I am hereby instructing our Department of War to prepare for possible action. If we attack, it will be fast, vicious, and sweet, just like the terrorist thugs attack our CHERISHED Christians,” he said.

His post was backed by several American Republicans and officials of his government, including his Defense Secretary Peter Hegseth, who replied: “Yes sir. The killing of innocent Christians in Nigeria — and anywhere — must end immediately. The Department of War is preparing for action. Either the Nigerian Government protects Christians, or we will kill the Islamic Terrorists who are committing these horrible atrocities.”

“You can’t underestimate President Trump,” said a political scientist, Ms Georgina Etete. “He could go to any length to justify the tag and also invade the country,” she said, noting that the it might have a dire impact on Nigeria’s securities.