Oyedele Warns Naira Could Hit N4,000/$ if Fuel Subsidy Returns

Finance Minister Taiwo Oyedele has warned that restoring petrol subsidies could push the naira to as low as N4,000 per dollar. He said even a signal that the government is considering a return to subsidy would be enough to unsettle financial markets.

Oyedele spoke at a press briefing after the International Monetary Fund and World Bank annual meetings in Bangkok, Thailand, on Monday, October 19. He outlined N3,000, N3,500 and N4,000 per dollar as possible downside scenarios. He stressed they were a warning, not a confirmed forecast.

Markets would react before policy change

The minister said foreign and local investors would not wait for a formal announcement. He said: "If, for any reason, the President were to say we are merely considering the return of fuel subsidy, capital would react immediately."

Oyedele explained that the signal alone could prompt foreign investors to pull funds out of Nigeria. Local business owners and wealthy Nigerians could also convert savings into dollars as a hedge. That surge in demand for foreign exchange would put direct pressure on the naira.

A weaker naira would raise the cost of imported goods and petroleum products. That would add to inflationary pressure and squeeze household budgets already stretched by high living costs since the subsidy was removed in May 2023.

NNPCL discounts are commercial, not subsidy

Oyedele pushed back on claims that temporary petrol price reductions by the Nigerian National Petroleum Company Limited are equivalent to bringing back a government-funded subsidy. He described the discounts as a commercial decision by NNPCL to attract customers. He said they carry no direct cost to the government budget.

The minister maintained that petrol subsidy removal and foreign exchange market liberalisation are central to the Tinubu administration's reform agenda. He argued that reversing either policy would damage investor confidence and slow progress on stabilising the economy. Rising fuel and transport costs continue to drive calls for government relief.

NNPCL recently raised petrol prices to N1,405 per litre at its filling stations. The pump price rose by N35 from the previous N1,370 per litre. Filling station attendants were reportedly informed over the weekend, with the new price taking effect the following day. Customers using the NNPCL mobile app and completing payments digitally can still get a N66 per litre discount.

What it means for the naira

The warning puts the subsidy debate at the centre of naira stability. Any policy reversal would likely quicken dollar demand and weaken the currency, with knock-on effects for importers, fuel costs and consumer prices. For businesses, the risk is a fresh round of exchange rate volatility before any formal policy shift.