Nigeria’s financial assets suffered a sharp decline on Monday, November 3, 2025, after President Donald Trump threatened military action against the country if its government failed to halt the killings of Christians by Islamist militants. This threat, posted on Truth Social, instructed the Pentagon “to prepare for possible action” and included the threat of an immediate cutoff of aid to Nigeria.
The immediate impact was a swift drop in value for Nigerian dollar bonds and its currency, the naira. Nigerian dollar bonds recorded the biggest losses in emerging markets on the day, comprising all 10 of the worst performers worldwide by mid-morning in Lagos. The notes maturing in 2047 were hit hardest, falling as much as 0.6 cents on the dollar to 88.26 cents before slightly paring the decline. Similarly, the naira dropped 1.2% against the dollar to 1,442.80, marking its largest intraday loss since June and the biggest among all emerging-market currencies that day.
Presidential Response and Investor Confidence
Nigerian President Bola Tinubu rejected Trump’s characterization, arguing that it disregarded “the consistent and sincere efforts of the government to safeguard freedom of religion and beliefs for all Nigerians”. Despite the unexpected escalation of a US military threat, some investors remained confident, citing Nigeria’s underlying creditworthiness and positive outlook. Portfolio manager Anders Faergemann stated, “We expected a negative knee-jerk reaction… but we are comfortable with Nigeria’s creditworthiness and outlook. We expect markets will calm down”.
This market confidence stems from positive momentum built since Tinubu’s election in 2023, following his implementation of significant economic reforms, including the removal of a costly fuel subsidy and liberalizing the currency market. This reform push had already seen the Nigerian stock market gain nearly 60% in dollar terms this year, and the average spread on sovereign dollar bonds over US Treasuries dropped substantially, moving away from levels that signalled debt distress. Adriaan du Toit, director of emerging-market credit research at AllianceBernstein, told Bloomberg that the threat was an “unexpected and seemingly disproportionate escalation” but suggested it lacked sufficient substance to dim the positive fundamental momentum.
History of Nigerian Asset Shocks Since 2015
Since 2015, Nigerian assets have been subject to multiple, often intertwined, crises, leading to significant drops in value. The country’s heavy reliance on oil revenues makes it highly susceptible to global oil price volatility, a key driver of asset declines.
2015-2016 Recession (First in Decades): The most significant shock was the sharp decline in global crude oil prices, which had dropped from over $100 per barrel in 2014 to around $30 by 2016. Given that oil accounts for the majority of Nigeria’s foreign exchange earnings, this drop depleted reserves and led to a severe depreciation of the naira. The initial price shock, combined with a reduction in crude oil output due to renewed hostilities in the Niger Delta and policy uncertainty following the 2015 election, pushed the economy into a recession in 2016. GDP growth fell to -1.61% that year.
2020 Recession (COVID-19 Pandemic): The second recession since 2015 was triggered by the COVID-19 pandemic, which caused massive global supply chain disruptions and a further collapse in crude oil prices. GDP contracted by -1.79% in 2020.
Post-2023 Reforms and Currency Devaluation: The bold reforms initiated by the Tinubu administration in 2023, while aimed at long-term stability, led to immediate asset value shocks. The unification and floating of the exchange rates caused the naira to depreciate sharply. Although this step was intended to address fiscal imbalances, it triggered a surge in inflation, eroding real incomes and the dollar value of domestic assets.
Alongside these economic factors, persistent security challenges across the country, including terrorism and banditry, have disrupted agricultural production and overall economic activity, dampening investor sentiment and asset valuations. This recurring cycle of oil-driven booms and busts, policy inconsistencies, and high levels of corruption continues to define the country’s economic volatility.
