Nigeria’s currency has come under renewed pressure, with forex traders blaming a worsening liquidity crunch and weaker-than-expected Detty December inflows for the naira’s recent slide. Market operators say rising dollar demand and cautious foreign investors are eroding recent gains.
The naira ended last week weaker at the official foreign exchange market, closing at ₦1,466.5 to the dollar on Friday, December 19, 2025. That marked a steady decline from ₦1,454 earlier in the week and the weakest level since October, signalling a return of volatility after weeks of relative calm.
Central Bank of Nigeria data shows the naira depreciated for five consecutive trading sessions, reversing the stability seen in late November when the currency traded around ₦1,446.9 per dollar. The pressure coincided with a drop in external reserves, which fell from $45.47bn on December 12 to $45.21bn by December 19.
Forex traders say liquidity has thinned as foreign portfolio investors repatriate dividends and delay fresh investments. Speculative activity has also intensified, with many Nigerians still holding dollars as a hedge against uncertainty rather than converting to naira.
The President of the Association of Bureau De Change Operators of Nigeria, Aminu Gwadebe, said inflows typically associated with the festive “Detty December” season have failed to materialise at expected levels. He noted that much of the limited inflow is being diverted through unlicensed operators, reducing liquidity in official and retail markets.
According to him, online dollar transfer rates have climbed above ₦1,500, underscoring the depth of the supply squeeze. He added that arbitrage and speculation remain strong, reflecting lingering confidence issues despite earlier currency stability.
Another BDC operator, Umar Badaru, said dollar demand has surged due to year-end obligations, import payments, and speculative positioning. He said exporters’ proceeds are entering the system slowly, while portfolio investors remain cautious.
Badaru noted that although some Detty December-related inflows are beginning to appear, they are largely coming through electronic transfers rather than physical cash. As a result, their impact on street-level liquidity has been muted compared with previous years.
To stem the slide, the CBN injected $150m into the forex market about two weeks ago. Gwadebe said the move helped slow depreciation but has not fully restored confidence. He added that the recent licensing of 82 BDC operators could improve liquidity at the retail end of the market, which had been dominated by unregulated players.
The currency pressure comes as Nigeria’s FX reserves recorded their first decline in 25 weeks, ending a prolonged accumulation streak. Analysts link the reversal to slower inflows and elevated demand, with FX inflows plunging sharply in November and foreign portfolio and direct investments falling steeply.
Traders warn that without stronger inflows and tighter control of speculative demand, pressure on the naira could persist into early 2026.
