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- The ongoing tariff war between the US and other countries has triggered foreign exchange outflows from Nigeria, causing the naira to depreciate.
- The Central Bank of Nigeria (CBN) intervened in the forex market by selling $500 million to boost supply, but the naira still depreciated.
- The naira depreciated by 7.4% in the parallel market and 3.3% in the official market over a two-week period.
- Foreign investment outflow from the Nigerian stock market exceeded inflow by 78% in January, with foreign outflow increasing by 13.2% to N45.85 billion.
The ongoing global trade war has sparked uncertainty in the investment community, leading to significant losses in global stock markets and a depreciation of the naira. The Central Bank of Nigeria (CBN) has intervened in the forex market by selling $500 million to boost supply, but the naira still depreciated.
The naira depreciated by 7.4% in the parallel market and 3.3% in the official market over a two-week period, from February 26 to March 14. This depreciation has reversed the gains made in the first two months of the year.
Financial Vanguard’s analysis of NGX data shows that foreign investment outflow from the Nigerian stock market exceeded inflow by 78% in January. Foreign outflow increased by 13.2% to N45.85 billion, while foreign inflow decreased marginally by 2.3% to N25.66 billion.
The global trade war has sparked fears of higher inflation and a contraction in the global economy, leading to a flight to safer assets and a depreciation of emerging market currencies like the naira.
