Nigeria?s stock market extended its losses on Wednesday, falling by 1.19 percent, which is its steepest decline so far this month.

Profit-taking by investors in previously rallying stocks continued to weigh on sentiment, a trend which is expected to persist amid renewed caution following last weekend?s threat by United States President Donald Trump to enter Nigeria to root out terrorists allegedly killing Christians.

Wednesday?s huge decrease has further reduced stocks value by about N1.3 trillion, extending three-day dip to over N2.1 trillion.

Stocks and other asset classes have taken a hit since this week, confirming investors? fears that Trump?s threat could raise the risk premium on Nigerian assets, thereby eroding recent gains achieved by the nation?s reforms.

This month, the market has decreased by 2.15 percent and the market?s return this year has decreased to 46.52 percent, according to Wednesday?s trading data.

The stock market?s major pullback in early trading this month comes after record rally by 8 percent in October.

The NGX All-Share Index (ASI) and market capitalization depreciated from Tuesday?s 152,629.6 points and N96.970 trillion respectively to 150,573.87 points and N95.664 trillion.

Naira depreciates across FX markets

Also, the naira depreciated on Wednesday across the foreign exchange (FX) markets following a decline in liquidity and a slight increase in demand for the dollar.

Data from the Central Bank of Nigeria (CBN) show that after trading yesterday, the naira weakened by 0.3 percent as the dollar was quoted at 1,438.49/$, compared to 1,433.65/$ recorded on Tuesday at the Nigerian Foreign Exchange Market (NFEM).

At the parallel market, also known as the black market, the local currency lost N20 to close at N1,460 per dollar, marking a 1.4 percent depreciation from N1,440 recorded the previous day.

The daily foreign exchange rate for international transactions on the GTBank Naira card closed at N1,446 per dollar on Wednesday, compared to N1,443 recorded on Tuesday.

Despite the pressure on the naira, Nigeria?s external reserves continued to show steady growth, rising to $43.27 billion as of November 4, 2025, according to the latest CBN data.

However, FX inflows through the NFEM slowed last week, dropping to $1.04 billion from $1.37 billion recorded in the previous week, according to a report by Coronation Merchant Bank.

The report revealed that foreign portfolio investors (FPIs) remained the dominant source of inflows, accounting for 62.3 percent ($645.40 million) of total FX receipts. This was followed by contributions from exporters at 15.0 percent, non-bank corporates at 11.6 percent, foreign direct investments (FDIs) at 1.9 percent, and other sources at 9.2 percent.

The naira?s decline on Wednesday followed a volatile start to the week. On Monday, the currency had depreciated by 1.0 percent in the official FX market after remarks by President Trump.

Ayokunle Olubunmi, head of Financial Institutions Ratings at Agusto & Co., attributed the naira?s earlier weakness to Trump?s comments, which he said unsettled both the currency and bond markets. ?I think it?s not far-fetched because even in the bond market, we also saw a drop. So yes, I agree that it is largely because of this Trump pronouncement,? he said.

Olubunmi explained that the reaction was not unusual, noting that the markets often respond sharply to such political statements. ?The reaction in the currency and bond markets was not unexpected, considering that both had already shown signs of pressure following Trump?s comments,? he added.

He, however, expressed optimism that the situation would stabilise soon, describing Trump?s statements as part of his characteristic political style. ?The market will settle because this is Trump?s style, he often makes strong statements, causes some initial disruption, and then things strengthen at the end of the day, sometimes without any real action,? Olubunmi said.

According to him, the impact of such comments is typically short-lived. ?This is not the first time he?s doing it. Over the next couple of days, the market should stabilise,? he added.

By Tuesday, the naira had briefly recovered from Monday?s losses as the FX market appeared to shrug off the impact of Trump?s remarks on Nigeria. However, renewed pressure from declining liquidity and increased dollar demand weighed on the local currency once again on Wednesday. (BusinessDay)

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