The Central Bank of Nigeria (CBN) has moved to stabilize the foreign exchange market with a $197.71 million intervention, a timely boost as global currency markets react to new tariff threats from former U.S. President Donald Trump. This strategic injection comes at a critical juncture for Nigeria’s economy, with the naira facing mounting pressure from external shocks and internal demand pressures.
A Calculated Move to Shore Up the Naira
According to figures released by the CBN on Tuesday, the latest foreign exchange allocation targeted key sectors of the economy. The manufacturing sector received the lion’s share of 92.39million,whileairlinesandagriculturalindustrieswereallotted44.83 million and $36.91 million respectively. Smaller allocations went to petroleum products and raw materials, underscoring the bank’s focus on stabilizing essential imports.
This marks the third major FX intervention by the CBN in as many weeks, bringing the total injections for June to over 500million.Theaggressiveliquiditypushappearstobeyieldingresults,withthenairamaintainingrelativestabilityaround₦1,480/1 in the official market. However, parallel market rates tell a different story, with the dollar trading as high as ₦1,520—a persistent gap that continues to worry economists.
The Trump Factor: Looming Tariffs Cast Shadow
The CBN’s action takes on added significance against the backdrop of renewed trade tensions emanating from the United States. Donald Trump, now the Republican presidential nominee, has vowed to impose sweeping 10% tariffs on all imports if re-elected—a move that could disproportionately affect emerging markets like Nigeria.
Trump’s proposed tariffs represent a clear and present danger to Nigeria’s external reserves,” warned Bismarck Rewane, CEO of Financial Derivatives Company. With oil prices already volatile and our import bill growing, the CBN is right to build buffers now before potential storm clouds gather.
Analysts note that Nigeria’s non-oil exports—particularly agricultural products like cocoa, sesame, and cashew nuts—could face stiff headwinds under such tariffs. The manufacturing sector, which relies heavily on imported raw materials, would also feel the pinch.
Reserves Under Pressure
Nigeria’s foreign reserves currently stand at 33.2billion,downfrom34.8 billion at the start of the year. The steady decline reflects lower crude oil earnings and sustained FX demand pressures. While the recent $2.25 billion World Bank loan provided temporary relief, experts caution that reserves remain vulnerable to external shocks.
The CBN is walking a tightrope,” said Razia Khan, Standard Chartered’s Chief Economist for Africa. They need to maintain liquidity to support the naira, but must also preserve enough reserves to weather potential global trade disruptions.
Manufacturers Breathe Sigh of Relief—For Now
For Nigerian manufacturers, the latest FX allocation offers a temporary reprieve from chronic dollar shortages that have plagued operations. The Dangote Group, Flour Mills of Nigeria, and other industrial giants rely heavily on these interventions to procure machinery and raw materials.
We appreciate the CBN’s efforts, but sustainable solutions are needed,” said Mansur Ahmed, Director-General of the Manufacturers Association of Nigeria (MAN). The real fix lies in boosting local production and reducing import dependence.
As global markets brace for potential trade wars, the CBN faces unenviable choices. Further rate hikes could attract foreign portfolio investors but risk stifling economic growth. Maintaining the current FX regime may require even larger interventions, draining precious reserves.
For ordinary Nigerians, the stakes couldn’t be higher. A weaker naira translates directly to higher prices for everything from petrol to pasta. With inflation already at 33.7%, the CBN’s next moves will determine whether Africa’s largest economy steadies itself or stumbles into deeper crisis.
One thing is certain: in an era of Trump tariffs and turbulent markets, Nigeria’s economic guardians have little margin for error. The $197.71 million injection may calm nerves today, but the real test of the naira’s resilience still lies ahead.
