Nigeria’s financial markets have plunged into turmoil following former US President Donald Trump’s classification of the country as a “Country of Particular Concern” (CPC) and accompanying military threats. Economic indicators show significant losses across key sectors, highlighting acute investor anxiety.

The Nigerian Exchange Limited (NGX) suffered a ₦2.8 trillion equity crash while the naira depreciated sharply against major currencies. Financial analysts attribute this instability to shaken investor confidence and concerns about Nigeria’s global standing.

Investor Reactions and Market Vulnerability

Mazi Okechukwu Unegbu, former President of the Chartered Institute of Bankers of Nigeria, noted that global investors react swiftly to geopolitical signals from major powers. “Trump’s comments created immediate uncertainty, causing delayed investments and abandoned plans,” Unegbu stated.

The crisis triggered massive sell-offs on the NGX, capital flight, and halted new investment inflows. Unegbu emphasized that despite short-term panic, Nigeria’s underlying economic fragility remains the core issue: “Previous forex gains were artificial – we still rely excessively on imports. True recovery requires boosting productive capacity.”

Diplomatic Tensions and Economic Consequences

Economist Prof. Godwin Oyedokun linked the naira’s plunge to fears that CPC designation signals deteriorating US-Nigeria relations. “Global markets are hypersensitive to political risk. Foreign capital flees at any conflict or sanction threat,” he explained.

Oyedokun warned that panic-driven dollar purchases worsen currency volatility: “Such reactions could keep the naira under pressure for weeks. We need composure, not emotional financial decisions.” He urged Nigerians to avoid speculative behavior that deepens market instability.

Path to Recovery and Reform Imperatives

Experts unanimously call for urgent government action. Oyedokun proposed reopening US diplomatic channels to clarify Nigeria’s status and reassure investors. “Transparent communication can prevent further speculation,” he noted, while advocating coordinated efforts between monetary and fiscal authorities.

The crisis spotlights Nigeria’s vulnerability to external shocks. Both analysts emphasized that lasting stability requires tackling insecurity hampering agriculture and industry, strengthening institutions, and reducing import dependency through economic diversification.

While acknowledging the severity of current shocks, Oyedokun sees opportunity: “This turbulence could finally push Nigeria to implement overdue reforms that build long-term resilience.” Market watchers caution that without decisive policy intervention, economic turbulence may persist longer than anticipated.