Weakening Dollar Boosts Nigeria's Stock Market as Global Investors Turn Cautious

Strategic Insights -

As global markets are shaken by President Donald Trump's erratic trade policies, investors are cautiously shifting their attention to emerging markets, including Nigeria and other major African stock markets. The weakening dollar is benefiting these markets as investors seek safer havens from global uncertainty. According to Charlie Robertson, head of macro-strategy at FIM Partners, "Africa, like much of emerging markets (EM), does well when the dollar is weak... and when Trump isn't paying them much attention."

Key Takeaways:

  • The Nigerian equities market saw a significant increase in foreign portfolio investors (FPIs), with N996.03 billion worth of stocks traded in five months to May 2025, compared to N458.29 billion in the corresponding period of 2024.
  • The US president's delayed reciprocal tariffs until August triggered market volatility and currency declines, but the Nigerian naira recorded a gain of N90 or 5.7 percent in the black market and 0.8 percent in the official foreign exchange market.
  • Egypt, Nigeria, Kenya, and Morocco are among the top-performing equity markets, with Egypt increasing by 16 percent, Nigeria by 22 percent, Kenya by 39 percent, and Morocco by 45 percent in US dollars.
  • The S&P 500 fell 0.8 percent on Monday as Trump sent letters about impending tariffs to South Korea and Japan.
  • The delay in tariffs gave countries three extra weeks to negotiate trade deals, but traders remain on edge due to Trump's unpredictability.
  • Data from the Central Bank of Nigeria (CBN) showed that the naira appreciated by N11.65 in the official market, closing at N1,529.71 on June 30, 2025.
  • Lagos-based Vetiva analysts stated that while Tuesday's surge reflected revived risk-taking, investors may test profit-taking levels soon, but market breadth remains positive due to rotational positioning.
  • Investors are likely to stay active as they anticipate H1'25 earnings releases and reassess portfolio allocations.

Statistics:

  • $N996.03 billion: Total value of stocks traded by FPIs in Nigeria in five months to May 2025.
  • 5.7 percent: Naira gain in the black market.
  • 0.8 percent: Naira gain in the official foreign exchange market.
  • 90 Naira: Naira appreciation in the official market.
  • 16 percent: Increase in Egypt's equity market.
  • 22 percent: Increase in Nigeria's equity market.
  • 39 percent: Increase in Kenya's equity market.
  • 45 percent: Increase in Morocco's equity market.

Sources:

  • BusinessDay
  • FIM Partners
  • Central Bank of Nigeria (CBN)
  • Vetiva