Trump's Religious Freedom Move Sparks Nigeria Market Crash

Nigeria's dollar-denominated bonds and naira plunged to the top of emerging-market losers on Monday after President Donald Trump warned of potential military action and aid cuts over alleged Christian persecution in the country. Trump's remarks, which labeled Nigeria a "Country of Particular Concern" under U.S. religious freedom laws, triggered immediate market selloffs, with the 2047-dated sovereign bond dropping 0.6 cents to 88.26 cents on the dollar, the worst performer among EM debt. The naira weakened 1.2% to ₦1,442.80 per dollar, its steepest intraday decline since June, according to Cryptopolitan.

Trump's designation of Nigeria as a CPC—a move that could authorize sanctions—cited "existential threats" to Christianity in the country, accusing radical Islamists of orchestrating a "mass slaughter" of Christians. "The U.S. will immediately stop all aid and assistance to Nigeria, and may very well go into that now disgraced country, 'guns-a-blazing,' to completely wipe out the Islamic Terrorists," Trump wrote on Truth Social, the San Francisco Chronicle reported. The move reverses a 2023 Biden-era delisting of Nigeria from the CPC list, which had been seen as a diplomatic overture ahead of Antony Blinken's visit, the San Francisco Chronicle noted.

The Nigerian government, led by President Bola Tinubu, rejected the allegations, emphasizing "consistent and sincere efforts" to protect religious freedom. Analysts note that while Christians are targeted in Nigeria's Middle Belt, most violence stems from ethnic and resource conflicts, with Muslims also among the primary victims in the north, the San Francisco Chronicle added. U.S. lawmakers, including Sen. Ted Cruz, have long pushed for accountability, with Cruz's Nigeria Religious Freedom Accountability Act aiming to impose sanctions on officials enabling blasphemy laws or extremist attacks, according to Newsmax.

The market fallout reflects heightened sensitivity to U.S. political rhetoric. Nigeria's bonds and currency fell sharply as foreign investors exited risk assets amid uncertainty over potential aid suspensions or military interventions. "Political messaging from Washington can immediately reposition global funds out of Nigeria's risk asset space," said traders in London and New York, who reported heavy selling in longer-dated debt, Cryptopolitan said. Meanwhile, the naira's broader October performance showed resilience, appreciating 3.63% against the dollar amid improved foreign exchange inflows and Dangote Refinery's output stabilizing demand, Punch reported.

The U.S. designation follows a contentious pattern: Nigeria was first labeled a CPC in 2020 under Trump, but the Biden administration removed it in 2023 to ease diplomatic ties. The renewed focus on religious persecution aligns with Trump's broader strategy to pressure allies and adversaries on human rights, even as it risks straining relations with Africa's largest economy.

Globally, the move coincides with a temporary U.S.-China trade truce, where both sides paused port fees and reduced tariffs. However, Nigeria's crisis highlights how geopolitical posturing can directly impact emerging markets. With Trump's warning of "fast, vicious, and sweet" military action if Nigeria fails to act, investors are bracing for further volatility, the San Francisco Chronicle warned.