Currency traders have complained of liquidity challenges in the forex market, causing the depreciation of the naira in recent times.
They attributed the liquidity problem to the activities of foreign investors, some of whom are exiting with their dividends and also cautious with their investment in the market.
The forex traders also said that the activities of speculators have been putting pressure on the naira, with some Nigerians still preferring to keep their money in foreign currency as a store of value.
The naira closed the week on a weaker note, trading at N1,466.5/$1 on Friday, December 19, 2025, at the official foreign exchange market, as against the N1,454/$1 it traded on Monday, December 15, extending a steady depreciation recorded throughout the week.
This represents a level not seen since October 21, 2025, when the naira closed at N1,464.5/$1, highlighting the return of volatility after a period of relative stability.
Data from the Central Bank of Nigeria’s (CBN) website shows that the naira weakened against the dollar and some other major currencies for five consecutive trading sessions in the week that just ended.
This reflects a return of volatility and renewed pressure in the FX market after a period of relative stability and good performance of the naira, with the naira trading at N1, 446.9/$1 at the end of November 2025.
This is amid a drop in external reserves as it decreased from $45.472 billion on Friday, December 12, to $45.209 billion as of the close of business on Friday, December 19, 2025.
Speaking exclusively with Naijaonpoint, the President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, admitted that there are some liquidity issues in the forex market, leading to the depreciation of the naira.
He said that the forex inflow from Nigerians from Diaspora coming in for Detty December is not coming as expected, with the little available being ambushed by unlicensed operators.
Gwadebe said, ‘’There was no liquidity. That’s the truth of the matter. You know the rate is even depreciating. The Naira is suffering a lot because the online transfer is even above N1,500. So, no liquidity.
‘’You know these foreign investors, some of them are exiting with their dividends and what have you. So, it’s creating demand. And then also the “Detty December” money we normally see come in to ensure liquidity—that one is not coming. It is being ambushed by the ungoverned space.
‘’And then, as usual, you cannot remove the impact of arbitrage and speculation. People still prefer, honestly, to keep their money in foreign currency as a store of value despite the stability. There is no total confidence.’’
Also, in a chat with Naijaonpoint, another BDC operator, Umar Badaru, said the current liquidity issues in the forex market are caused by a sharp rise in demand due to year end obligations, import payments, as well as speculations.
He pointed out that portfolio investors have been cautious, noting that the volume of inflow expected from Nigerians in Diaspora and foreign visitors coming for Detty December is not as strong as expected.
He said, ‘’The current liquidity challenge in the forex market is largely driven by a mismatch between demand and supply. Demand has risen sharply due to year-end obligations, import payments, and speculation, while inflows have been slower than expected. Portfolio investors are still cautious, and exporters’ proceeds are not entering the system fast enough. These factors have combined to put pressure on the naira, resulting in the recent volatility we have seen.
He said, ‘’The current liquidity challenge in the forex market is largely driven by a mismatch between demand and supply. Demand has risen sharply due to year-end obligations, import payments, and speculation, while inflows have been slower than expected. Portfolio investors are still cautious, and exporters’ proceeds are not entering the system fast enough. These factors have combined to put pressure on the naira, resulting in the recent volatility we have seen.
‘’We are beginning to see inflows linked to ‘Detty December,’ especially from diaspora Nigerians and foreign visitors. However, the volumes are not yet as strong as many operators anticipated. Spending is happening, but much of the inflow is coming through informal channels and electronic transfers rather than physical cash, so its impact on street liquidity is more muted than in previous years.’’
Gwadebe noted that the CBN decided to intervene, strengthen the naira and stop the depreciation with the injection of $150 million into the forex market about 2 weeks ago.
He also noted that the licensing of 82 BDC operators a few weeks ago would help inject more liquidity in the market, especially at the retail sector.
He said, ‘’CBN injected $150 million into the forex market because of the liquidity problem and yet we have still been seeing depreciation for a few weeks. So, I think the CBN decided to tame it.
“Now we thank God for the good news because before, the entire subsector was scared of going, I mean dead, despite paying money. So, with the release of these 82 names, at least there is hope, and it will give a directive or an indication for the retail sector. Before, the retail sector had been bereft of anything, no official or licensed operators in that sector. So, everybody was like, the market was dominated fully by the ungoverned space.
‘’So now that the CBN has brought out this list, I think it will help inject liquidity and also allow the licensed ones to start activating the market so that there will be more liquidity.’’
The licensed currency traders have always advocated participating in the sharing of International Money Transfer Operators (IMTOs) proceeds received by the banks and Fintechs as it will help ensure the harnessing and coordination of forex supplies to the critical retail end of the market, as well as track speculation, currency substitution and hoarding activities.
In a related development, Nigeria’s foreign exchange (FX) reserves recorded the first decline in 25 weeks, falling by $263.151 million to $45.21 billion as of December 17, 2025, according to new data from the Central Bank of Nigeria (CBN).
The drop, which followed three consecutive days of outflows between December 15 and 17, marks a reversal of a long-running accumulation trend that pushed reserves to their highest level in six years.
The contraction ended a sustained build-up that had peaked at $45.472 billion on December 12.
Some of these could be attributed to slower inflows and high demand. FX inflows plunged by 67% month-on-month to $2.0 billion in November, the lowest since July 2024. Foreign portfolio inflows fell sharply to $593 million from $3.5 billion, while FDI collapsed to $10.4 million from $221 million, heightening pressure on the naira. Analysts blamed the reversals on the controversial Capital Gains Tax (CGT).