Amid a sharp decline in global crude oil prices and escalating trade tensions fueled by sweeping U.S. tariffs, the Central Bank of Nigeria (CBN) has moved swiftly to stabilize the country’s foreign exchange market. The apex bank intervened with nearly $200 million in forex sales to authorized dealers as Nigeria grapples with the twin challenges of falling oil revenue and growing external economic uncertainty.
The intervention comes at a critical moment for the country, which relies heavily on crude oil exports for roughly 90% of its foreign exchange earnings. Oil prices, once hovering at $70 per barrel, have plummeted by over 12% to around $65.50, creating renewed pressure on Nigeria’s economic stability.
CBN Acts to Stabilize Forex Market
In a circular released on Sunday, the CBN revealed that it provided $197.71 million in foreign exchange liquidity through official sales to authorized dealers on Friday, April 4, 2025. The move, the bank noted, is part of its broader strategy to ensure consistent market liquidity and promote orderly functioning of the forex market amid mounting global uncertainties.
“This intervention aligns with our commitment to maintaining adequate liquidity in the foreign exchange market and supporting a stable and efficient currency exchange environment,” the CBN stated.
The bank explained that the foreign exchange market had experienced noticeable volatility between April 3 and April 4, driven largely by global macroeconomic shifts impacting several emerging and developing economies, including Nigeria.
Global Tariff Shocks Fuel Market Volatility
The CBN specifically pointed to recent announcements from the United States government regarding new import tariffs targeting several trading nations. These tariffs, introduced by President Donald Trump, have triggered volatility across international markets, causing capital flows to shift rapidly and energy prices to slump.
“These developments stem from the recent announcement of new import tariffs by the United States government on imports from several economies, which has triggered a period of adjustment across global markets,” the bank noted. “Crude oil prices have also weakened—declining by over 12% to approximately $65.50 per barrel—presenting new dynamics for oil-exporting countries such as Nigeria.”
Nigeria, whose economic resilience is intricately tied to oil revenues, is especially vulnerable to these shifts. A downturn in oil prices directly affects the government’s foreign exchange inflow, constraining its ability to fund imports, stabilize the naira, and meet external obligations.
Nigeria Among Targets in Trump’s Latest Tariff Wave
The ongoing turbulence in the global trade landscape was sparked by the United States’ latest round of tariffs, which represent President Trump’s most far-reaching protectionist policies to date. The tariffs have targeted over 100 countries, including Nigeria, with newly imposed levies.
Under the revised policy, Nigerian exports to the United States now face a 14% tariff, up from the previous lower duty rates. This is in contrast to Nigeria’s existing 27% tariff on imports from the U.S., further complicating the bilateral trade equation.
In 2024, Nigeria exported goods worth approximately ₦931 billion to the U.S., largely consisting of crude oil. Conversely, Nigeria imported ₦1.05 trillion in goods from the United States, creating a trade imbalance that could deepen under the weight of the new tariffs.
The tariff escalation, which has drawn criticism from multiple countries, has raised fears of a global trade war with wide-ranging implications. Countries such as the European Union member states, the United Kingdom, India, and China were also targeted in the tariff hike, while North American neighbors Mexico and Canada were notably exempted.
Broader Implications for Nigeria’s Economy
The ripple effects of the U.S. tariff policies are already being felt across commodity and currency markets. Analysts warn that a prolonged slump in crude oil prices could significantly dent Nigeria’s economic growth, fiscal revenues, and foreign reserves.
Lower oil prices mean reduced earnings from exports, which could lead to tighter foreign exchange availability, a situation that historically pressures the naira and accelerates inflation. With the CBN committed to maintaining exchange rate stability, further interventions may be necessary if global trends continue to weigh on the country’s economic fundamentals.
Moreover, the potential for a trade-led global recession—fueled by tit-for-tat tariff responses—poses broader risks. Declining demand for Nigerian crude, rising costs of imported goods, and constrained global investment flows could collectively undermine Nigeria’s efforts to rebound from previous economic shocks.
Need for Policy Adaptation and Economic Diversification
These latest developments underscore Nigeria’s vulnerability to external economic shocks and highlight the urgent need for policy reforms and economic diversification. While the CBN’s intervention provides a temporary cushion, long-term resilience will depend on reducing the country’s overdependence on crude oil exports and expanding non-oil revenue sources.
Experts have called on the federal government to accelerate investments in agriculture, manufacturing, technology, and services to boost export potential and build a more balanced trade structure. Expanding domestic refining capacity, attracting foreign direct investment, and strengthening regional trade ties are also seen as critical to mitigating exposure to volatile global markets.
CBN’s Forward Strategy
The Central Bank of Nigeria reiterated its resolve to maintain transparency and efficiency in the foreign exchange market while navigating current global economic headwinds. By providing timely interventions, the bank aims to reinforce investor confidence and ensure that essential imports—such as food, fuel, and industrial machinery—remain adequately funded.
“We remain focused on fostering a stable macroeconomic environment that supports growth, investment, and financial inclusion,” the CBN emphasized in its statement. “Current actions reflect our proactive approach to safeguarding Nigeria’s economic stability in the face of global volatility.”
Moving forward, the bank is expected to monitor global oil prices, U.S. trade policies, and capital flow dynamics closely. Any further declines in oil revenue or disruptions to trade could prompt additional monetary interventions or adjustments in fiscal coordination between the CBN and the federal government.
Conclusion: Navigating a Complex Global Economic Terrain
The current crisis highlights how deeply intertwined Nigeria’s economy is with global oil markets and trade flows. The dual pressure from falling oil prices and aggressive U.S. trade measures presents a formidable challenge for policymakers. However, the CBN’s swift forex intervention signals a readiness to respond and stabilize the economy, even as broader reforms become more urgent.
With the global economic outlook remaining uncertain, Nigeria’s leadership will need to chart a course that embraces resilience, innovation, and diversification to secure a more stable and self-reliant future.
