Why the Naira is depreciating fast as the global tariff war rages

• The planetary tariff warfare betwixt the US, Canada, Mexico, the EU and China has affected the Nigerian naira
• The tariff warfare led to the naira depreciating successful the overseas speech marketplace arsenic investors pulled their investments from the NGX
• Data from the Central Bank of Nigeria shows that forex outflows grew by 78% successful January this year, starring to an N45.45 cardinal outflow successful dollar terms

Legit.ng’s Pascal Oparada has reported connected tech, energy, stocks, concern and the economy for implicit a decade.

The uncertainty of the ongoing tariff warfare betwixt the United States and immoderate countries has caused the exit of overseas speech from Nigeria, starring to a two-week depreciation of the naira.

The improvement prompted the Central Bank of Nigeria (CBN) to intervene successful the FX marketplace past week, selling astir $500 cardinal to boost supplies.

Foreign speech outflow affects the naira's performance Credit: Bloomberg/Contributor
Source: Getty Images

The naira falls successful authoritative and achromatic markets

However, the naira continued to depreciate play by N55 to N1,600 per dollar successful the parallel market, the lowest successful 5 weeks since February 5, 2025.

In the Nigerian Foreign Exchange Market (NFEM), the Nigerian currency depreciated by N6 to N1,548 per dollar.

The raging tariff warfare triggered uncertainty successful the planetary system arsenic Canada, Mexico, China and the EU retaliated against President Donald Trump’s tariff hikes.

Investors retreat FX from the Nigerian economy

Experts accidental the fearfulness of naira depreciating led to panic sell-offs, compounding the request unit successful the FX market.

According to information from the Nigerian Exchange Limited (NGX), overseas concern outflow from the banal marketplace exceeded inflow by 78% successful January.

Vanguard reports that the marketplace saw an N45.85 cardinal outflow against the overseas inflow, which stood astatine N25.66 billion.

While the overseas outflow roseate by 13.2% to N45.85 cardinal successful January this twelvemonth from N40.49 cardinal successful December past year, overseas inflow dropped marginally by 2.3% successful January 2025 from N26.26 cardinal successful December 2024.

Findings showed that the upward plaything successful FX outflow led to dollar scarcity, triggering continuous naira depreciation successful NFEM and the parallel market.

As a result, successful 2 weeks starting from February 26 to March 14, the naira depreciated by 7.4% successful the parallel marketplace to N1,600 from N1,490.

FX traders blasted banks

Also, the naira fell successful the authoritative marketplace during the 2 weeks by 3.3% to N1,5480 per dollar from N1,499.

Legit.ng earlier reported that the crisp autumn of the naira was attributed to a anemic dollar supply.

Bureau de Change (BDC) operators successful Nigeria accused commercialized banks of failing to merchantability overseas speech to them. 

They judge the concern puts the naira successful a precarious presumption successful the overseas speech markets. 

Aminu Gwadabe, president of the Association of Bureau De Change Operators of Nigeria (ABCON) who raised the interest said BDCs are grappling with constricted availability of forex successful a chat with Legit.ng. 

Experts explicate the crushed for the naira's two-week depreciation. Credit: Bloomberg/Contributor
Source: Getty Images

He besides said that immoderate of the banks managing to merchantability are offering unfavourable rates, and little margins which is creating concern uncertainties. 

He noted that these factors person combined to substance currency substitution and speculative activities, starring to the weakening of the naira.

Naira experiences the biggest autumn successful each forex markets

Legit.ng earlier reported that helium Nigerian currency deed its lowest level successful 24 hours successful the authoritative Nigerian Foreign Exchange Market (NFEM) and the parallel market.

Currency dealers exchanged the dollar astatine N1,549, from N1,546, it traded the erstwhile day.

The existent naira worth is the biggest it has fallen successful 24 hours and successful March 2025, arsenic request for the US greenback heightened.

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Source: Legit.ng