J.P. Morgan warns investors of rising risks for Nigeria as oil prices fall and Trump’s tariffs unsettle markets

U.S. investment bank J.P. Morgan has urged investors to exit long positions in Nigerian Open Market Operation (OMO) bills, warning that global risks—driven by falling oil prices and renewed trade tensions—could deepen Nigeria’s macroeconomic vulnerabilities.

In a research note dated April 9, 2025 seen by Nairametrics, titled “Frontier Local Markets Strategy: Reducing risk further,” the bank advised clients to close their positions in Nigerian T-bills as Brent crude oil approaches sub-$60 levels.

J.P. Morgan, which had previously backed Nigeria’s carry trade for its high yield and relative stability, has now shifted its stance, citing a changing global environment worsened by former President Donald Trump’s re-emergence as a leading candidate in the U.S. elections and his push for sweeping global tariffs.

Nigeria’s central bank had earlier in the month assured stakeholders that it expected an uptick in external reserves, after it declared a net of $23 billion. It also recently declared a balance of payment surplus of $6.83 billion at the end of  2024, “signalling economic resurgence” and citing ongoing monetary policy reforms.

However, JP Morgan noted that if oil prices remain below $60 per barrel—the estimated breakeven price for Nigeria—it could push Nigeria’s current account back into deficit.

This would place significant pressure on the naira and intensify the demand for dollar assets. J.P. Morgan had earlier forecasted that in such a scenario, the USD/NGN exchange rate could surpass the 1,700/$1 mark. The current exchange rate trades around 1,500/$1, but is highly dependent on foreign inflows.

Source: Nairametrics