The naira weakened further last week as forex traders blamed tight liquidity and weaker-than-expected Detty December inflows.
Operators said reduced dollar supply, rising year-end demand, and persistent speculation have combined to pressure the local currency.
Foreign investors exiting the market and cautious portfolio inflows have also worsened the liquidity squeeze.
Naira Hits Two-Month Low
The naira closed at โฆ1,466.5/$1 on Friday, December 19, 2025, at the official market.
This compares with โฆ1,454/$1 on Monday, December 15, extending a steady depreciation through the week.
The level marks the weakest close since October 21, 2025, when the naira settled at โฆ1,464.5/$1.
Central Bank of Nigeria (CBN) data showed the currency declined for five consecutive trading sessions.
The slide follows a period of relative stability, when the naira traded at โฆ1,446.9/$1 at the end of November.
External Reserves Decline
Nigeriaโs external reserves fell alongside the currency.
CBN figures show reserves declined from $45.472 billion on December 12 to $45.209 billion by December 19, 2025.
The drop reflects slower inflows and sustained dollar demand across the economy.
Detty December Inflows Fall Short
The President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, confirmed liquidity challenges.
โThere was no liquidity. Thatโs the truth of the matter,โ Gwadebe said.
โThe naira is suffering because online transfer rates are even above โฆ1,500. The usual Detty December inflows are not coming.โ
He explained that foreign investors are repatriating dividends, increasing dollar demand.
โThe inflows we normally see during Detty December are being ambushed by the ungoverned space,โ he added.
Gwadebe also cited speculation and currency hoarding.
โPeople still prefer to keep money in foreign currency as a store of value. Confidence is not total,โ he said.
Year-End Demand Drives Pressure
Another BDC operator, Umar Badaru, attributed the situation to a demand-supply mismatch.
โDemand has risen sharply due to year-end obligations, import payments, and speculation,โ Badaru said.
He noted that inflows from exporters and portfolio investors remain slow.
โDetty December inflows are coming, but not at the volumes many anticipated,โ he explained.
According to him, most inflows now arrive through electronic transfers rather than cash, limiting their impact on street liquidity.
CBN Intervenes in FX Market
Gwadebe disclosed that the CBN injected $150 million into the forex market about two weeks ago.
The intervention aimed to stabilise the naira and ease liquidity pressures.
He also welcomed the recent licensing of 82 BDC operators, saying it could improve retail forex supply.
โWith the release of these names, there is hope for the retail segment,โ he said.
โThe market had been dominated by the ungoverned space. Licensed operators can now help inject liquidity.โ
Why It Matters
Licensed currency traders continue to advocate access to International Money Transfer Operators (IMTOs) proceeds.
They argue that broader participation would improve transparency, curb speculation, and reduce hoarding.
In a related development, Nigeriaโs FX reserves recorded their first decline in 25 weeks, falling by $263.15 million to $45.21 billion as of December 17, 2025.
FX inflows plunged 67% month-on-month to $2.0 billion in November.
Foreign portfolio inflows dropped to $593 million from $3.5 billion, while FDI fell sharply to $10.4 million from $221 million.
Analysts partly attribute the reversals to policy uncertainty, including concerns around the Capital Gains Tax.
What to Watch
Market participants expect continued volatility in the near term.
Much depends on improved inflows, sustained CBN intervention, and restored investor confidence.
Get real time update about this post category directly on your device, subscribe now.
