Market News

By Bamidele Ogunwusi 

LAGOS – The policies of the new administration of Donald Trump, the 47th President of the United States, may spell doom for African countries, especially Nigeria.

The Chief Executive Officer of Nairametrics, Mr. Ugodre Obi-Chukwu, disclosed this while speaking on Nigeria’s Macroeconomic Outlook for 2025 at a bi-monthly forum of the Finance Correspondents Association of Nigeria (FICAN) on Tuesday.

Obi-Chukwu said the new regime policies “could weaken the African currencies, increase debt servicing costs and heighten inflation”.

He added that the policies of “American First” by Trump’s new regime will use lower U.S. rates, and this might attract investment to sub-Saharan Africa (SSA) if yields remain high.

He added that increased U.S. oil production may suppress prices, reducing revenue for oil producers and this will greatly affect Nigeria.

He stressed that there may be trade risks and a potential end to AGOA, and this could hurt SSA exports to the U.S., while impending travel restrictions may lower remittances, impacting FX reserves and consumption.

Significantly, he added that there is the possibility that the new government may hike tariffs and might raise import costs and Africa’s inflation challenges.

Speaking on the first meeting of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC), Obi-Chukwu said it will largely be influenced by inflation numbers in January.

Advertisement

He said, “Let me say here that the first meeting of MPC will largely be influenced by inflation numbers in January, which would have been out in February before the meeting. “I suspect that because of the inflation, they will likely keep rates stable.

They are flat, on the flip side, depending on maybe some of the things that are happening globally, maybe some of the moves that Trump makes, if they don’t reduce interest rates as expected, because I think the job support that came out in the US earlier in the month sort of jolted markets.

Then you could see the CBN adjust rates. “I don’t think that they want to reduce rates for now in February, but all year round, I think you expect to see rates start to go down.

“They can’t continue to keep returning up. I guess one of the things I would be worried about is that the December inflation rate was 34.8 percent, so it’s still higher than your target, but I think they know that the numbers are likely going to come back down.

“And of course, they would also cite the fact that December is when people spend a lot, so maybe that’s also why inflation went up in December. But more likely rates will remain stable”.

Meanwhile, the U.S. dollar began the week on a softer note as markets ushered in Donald Trump’s inauguration and the potential for sweeping policy announcements.

Investors are bracing for the impact of Trump’s controversial proposals, including mass deportations, higher trade tariffs, lower taxes, and deregulation.

While these measures could boost inflation and prompt the Federal Reserve to adopt a hawkish stance, political uncertainty continues to weigh on sentiment.

Elsewhere, rising expectations that the Bank of Japan (BoJ) might raise interest rates during its January 23-24 meeting adds to the dollar’s challenge. Such a move could potentially increase the yen’s appeal and pressure the dollar further.