. CBN Spends $4.7 Billion to Defend Naira in 2025
. Fears as Trump Threatens Nigeria, BRICS
Nigeria witnessed a staggering capital flight of $22.83 billion in the first half of 2025, as foreign investors pulled funds from the country’s financial markets in search of safer havens. The massive exodus, triggered by global economic instability and worsening investor sentiment, left the naira dangerously exposed—forcing the Central Bank of Nigeria (CBN) to inject a hefty $4.72 billion into the foreign exchange market in a desperate bid to defend the currency.
MarketForces Africa, a financial news media platform for strategic opinions about economic policies, strategy & corporate analysis, in a report said that the outflows, exacerbated by rising U.S. interest rates, geopolitical tensions, and a renewed wave of global protectionism, sparked fresh volatility in emerging markets. And Nigeria, already on shaky macroeconomic footing, was not spared. The result: a weak naira, rising exchange rates, and yet another round of currency firefighting by a government that has struggled to chart a stable economic course.
In response to the growing pressure, the CBN is said to have turned to its foreign reserves, pumping billions of dollars into the system to shore up liquidity and contain the naira’s slide. While these interventions provided temporary relief and helped maintain availability of U.S. dollars through authorised banks, they also highlighted the deep fragility of the naira. Despite the scale of support, the currency has continued to depreciate, posting losses against an already weak US dollar, an alarming sign that portends further trouble ahead.
While the President Bola Ahmed Tinubu administration has promised market-friendly reforms and a more transparent FX regime, critics say the fundamentals remain weak. Inflation is still uncomfortably high, oil revenues have underperformed, and investor confidence remains shaky amid worries over policy fidelity and rising debt obligations.
The CBN’s FX interventions, averaging $786.58 million monthly, were described by analysts at CardinalStone Partners, an independent, multi-asset investment management firm, as “necessary,” and also pointedly lower than the unsustainable pre-COVID levels of $2.3 billion. Still, critics argue that even this reduced pace of intervention reflects an underlying vulnerability: the naira is yet to find its feet in a truly liberalized market. The so-called “willing buyer, willing seller” model touted by the government has so far done little to arrest currency weakness.
More worrying is the growing view that, without constant regulatory support, the naira could collapse disastrously under the weight of weak fundamentals. Analysts warn that relying on FX injections to hold the line is neither a strategy nor a solution, especially when external debt servicing—estimated at $2 billion in just the first four months of the year—is already eroding reserves and limiting fiscal space.
While government-aligned commentators claim the naira is now approaching fair value, the data paints a less flattering picture. A currency that must be defended with billions, yet still slides week after week, is not stable—it is merely being propped up. The Tinubu administration’s understandable reluctance to embark on total, hard-nosed structural reforms, especially in export diversification and industrial productivity, means the naira remains vulnerable to the slightest shock.
Meanwhile, global headwinds appear set to worsen as U.S. President Donald Trump has threatened to impose an additional 10% tariff on countries aligning with the BRICS alliance — a group of emerging economies led by Brazil, Russia, India, China, and South Africa.
Although Nigeria is not a full member of BRICS, it was admitted recently as a “partner country,” a newly introduced category that allows participation in meetings, summits, and policy dialogues. President Tinubu is currently attending the 17th BRICS summit in Rio de Janeiro, Brazil, at the invitation of President Luiz Inacio Lula da Silva, underscoring Nigeria’s growing alignment with the bloc.
In a blistering post on Sunday night, Trump declared, “Any country aligning itself with the anti-American policies of BRICS will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy.” His comments came shortly after BRICS leaders criticized U.S. trade policy and military actions in the Middle East during a joint statement issued from the summit, prompting Trump’s retaliatory warning on social media.
Trump had issued similar warnings earlier this year, initially triggering a global market sell-off before temporarily backing off. With a self-imposed deadline of August 1 to renegotiate what he deems “unfair trade deals,” many countries, including U.S. allies, remain on edge.
For Nigeria, the potential fallout from a 10% tariff increase could be severe. A massive chunk of Nigerian exports to the United States consist of crude oil and petroleum products. While the U.S. is a key market for Nigerian oil, Nigeria accounts for only a marginal share of total U.S. trade, making it more vulnerable to punitive trade measures. Non-oil exports, which include fertiliser, agricultural goods, and light manufactured items, are already struggling to gain traction, and additional tariffs could stifle Nigeria’s efforts to diversify its export base.
The warning comes at a particularly precarious time for Nigeria’s economy. Since 2023, the country has been grappling with runaway inflation, currency volatility, and sluggish GDP growth. Inflation peaked at 34.2% in June 2024, though it has since receded to 27.5% according to the Central Bank of Nigeria (CBN). The CBN has held the inflation rate steady for two consecutive policy meetings, buoyed by painful but necessary reforms such as the removal of fuel subsidies and the liberalisation of the naira’s exchange rate.
While these measures have won praise from international institutions, they have also exacted a steep price on ordinary Nigerians. The cost of living has soared, wages remain stagnant, and unemployment continues to plague the working-age population. Despite maintaining its status as Africa’s largest economy, Nigeria remains heavily reliant on crude oil exports and is vulnerable to global market shifts—precisely the kind of shocks that Trump’s tariff threats represent.
The Tinubu administration has thus far offered no official response to Trump’s comments, but observers say the government may soon be forced to recalibrate its international alignments if the threat materialises.