Forex merchants have complained of liquidity challenges within the foreign exchange market, inflicting the depreciation of the naira in latest occasions.
They attributed the liquidity downside to the actions of international traders, a few of whom are exiting with their dividends and likewise cautious with their funding available in the market.
The foreign exchange merchants additionally stated that the actions of speculators have been placing stress on the naira, with some Nigerians nonetheless preferring to maintain their cash in international foreign money as a retailer of worth.
Naira falls to 2-month low
The naira closed the week on a weaker word, buying and selling at N1,466.5/$1 on Friday, December 19, 2025, on the official international change market, as in opposition to the N1,454/$1 it traded on Monday, December 15, extending a gradual depreciation recorded all through the week.
This represents a degree not seen since October 21, 2025, when the naira closed at N1,464.5/$1, highlighting the return of volatility after a interval of relative stability.
Knowledge from the Central Financial institution of Nigeria’s (CBN) web site reveals that the naira weakened in opposition to the greenback and another main currencies for 5 consecutive buying and selling periods within the week that simply ended.
This displays a return of volatility and renewed stress within the FX market after a interval of relative stability and good efficiency of the naira, with the naira buying and selling at N1, 446.9/$1 on the finish of November 2025.
That is amid a drop in exterior reserves because it decreased from $45.472 billion on Friday, December 12, to $45.209 billion as of the shut of enterprise on Friday, December 19, 2025.
Detty December influx not coming in
Talking solely with Nairametrics, the President of the Affiliation of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, admitted that there are some liquidity points within the foreign exchange market, resulting in the depreciation of the naira.
He stated that the foreign exchange influx from Nigerians from Diaspora coming in for Detty December shouldn’t be coming as anticipated, with the little accessible being ambushed by unlicensed operators.
Gwadebe stated, ‘’There was no liquidity. That’s the reality of the matter. You recognize the speed is even depreciating. The Naira is struggling loads as a result of the web switch is even above N1,500. So, no liquidity.
‘’You recognize these international traders, a few of them are exiting with their dividends and what have you ever. So, it’s creating demand. After which additionally the “Detty December” cash we usually see are available in to make sure liquidity—that one shouldn’t be coming. It’s being ambushed by the ungoverned area.
‘’After which, as typical, you can not take away the impression of arbitrage and hypothesis. Individuals nonetheless favor, truthfully, to maintain their cash in international foreign money as a retailer of worth regardless of the steadiness. There isn’t any whole confidence.’’
Elevated greenback demand
Additionally, in a chat with Nairametrics, one other BDC operator, Umar Badaru, stated the present liquidity points within the foreign exchange market are attributable to a pointy rise in demand because of 12 months finish obligations, import funds, in addition to speculations.
He identified that portfolio traders have been cautious, noting that the amount of influx anticipated from Nigerians in Diaspora and international guests coming for Detty December shouldn’t be as sturdy as anticipated.
He stated, ‘’The present liquidity problem within the foreign exchange market is largely pushed by a mismatch between demand and provide. Demand has risen sharply because of year-end obligations, import funds, and hypothesis, whereas inflows have been slower than anticipated. Portfolio traders are nonetheless cautious, and exporters’ proceeds should not coming into the system quick sufficient. These components have mixed to place stress on the naira, ensuing within the latest volatility we have now seen.
‘’We’re starting to see inflows linked to ‘Detty December,’ particularly from diaspora Nigerians and international guests. Nevertheless, the volumes should not but as sturdy as many operators anticipated. Spending is going on, however a lot of the influx is coming by casual channels and digital transfers reasonably than bodily money, so its impression on road liquidity is extra muted than in earlier years.’’
CBN’s intervention
Gwadebe famous that the CBN determined to intervene, strengthen the naira and cease the depreciation with the injection of $150 million into the foreign exchange market about 2 weeks in the past.
He additionally famous that the licensing of 82 BDC operators a number of weeks in the past would assist inject extra liquidity available in the market, particularly on the retail sector.
He stated, ‘’CBN injected $150 million into the foreign exchange market due to the liquidity downside and but we have now nonetheless been seeing depreciation for a number of weeks. So, I believe the CBN determined to tame it.
“Now we thank God for the excellent news as a result of earlier than, the complete subsector was terrified of going, I imply lifeless, regardless of paying cash. So, with the discharge of those 82 names, at the very least there may be hope, and it’ll give a directive or a sign for the retail sector. Earlier than, the retail sector had been bereft of something, no official or licensed operators in that sector. So, all people was like, the market was dominated absolutely by the ungoverned area.
‘’So now that the CBN has introduced out this checklist, I believe it would assist inject liquidity and likewise permit the licensed ones to start out activating the market in order that there will probably be extra liquidity.’’
What it’s best to know
The licensed foreign money merchants have all the time advocated collaborating within the sharing of Worldwide Cash Switch Operators (IMTOs) proceeds obtained by the banks and Fintechs as it would assist make sure the harnessing and coordination of foreign exchange provides to the crucial retail finish of the market, in addition to monitor hypothesis, foreign money substitution and hoarding actions.
In a associated improvement, Nigeria’s international change (FX) reserves recorded the primary decline in 25 weeks, falling by $263.151 million to $45.21 billion as of December 17, 2025, in keeping with new knowledge from the Central Financial institution of Nigeria (CBN).
The drop, which adopted three consecutive days of outflows between December 15 and 17, marks a reversal of a long-running accumulation pattern that pushed reserves to their highest degree in six years.
The contraction ended a sustained build-up that had peaked at $45.472 billion on December 12.
A few of these could possibly be attributed to slower inflows and excessive demand. FX inflows plunged by 67% month-on-month to $2.0 billion in November, the bottom since July 2024. Overseas portfolio inflows fell sharply to $593 million from $3.5 billion, whereas FDI collapsed to $10.4 million from $221 million, heightening stress on the naira. Analysts blamed the reversals on the controversial Capital Positive aspects Tax (CGT).
