London - Plunging oil prices, terrorism and messy pre-election politics are setting the stage for a rough time for Nigeria's battered currency, the naira, with some seeing it highly vulnerable to attack from speculators.
Africa's largest economy relies on oil exports for 80 percent of government revenues and has been hit hard as crude prices have fallen to four-year lows around $80 a barrel.
Along with a worsening domestic picture - attacks by the Islamist militants Boko Haram are almost a daily occurrence - oil's collapse has fuelled an 18 percent plunge in the local stock market. The naira has shrugged off repeated central bank interventions to hit record lows last week.
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Some in the market reckon that with Nigeria's reserves running at four-month lows and the oil price collapse preventing any replenishment, the naira is a prime candidate for an attack by speculators, who build up short positions by borrowing and selling a currency in hope of profiting from a swift exchange rate plunge.
"The markets are starting to see the blood here," said Emad Mostaque at Eclectic Strategy, a consultancy set up by former Deutsche Bank veteran John-Paul Smith.
"We are now entering a particularly dangerous period for the naira as time constraints and low resources to fight against speculative attack make the currency vulnerable," he said. "Everything is lining up for that currency attack."
There is in theory very little ammunition to defend the naira - data from the central bank showed its liquid reserves have declined since the start of the year by $5.77 billion or more than 15 percent to $36.69 billion by Tuesday.
Despite three interventions this week, the naira closed at 167.60 to the dollar on Wednesday, well above the central bank's trade band of 150-160 - a range it burst out of in May and which appears to have become merely cosmetic.
Non-deliverable currency forwards - short-term contracts used by counter-parties to lock in a future exchange rate, indicate a naira-dollar exchange rate of 176 in three months, a roughly 5 percent depreciation. Over 12 months time, forwards show the naira at 200.
A speculator attack may not necessarily materialise - analysts point out that in a relatively small market it would be technically difficult to "short" the naira on a huge scale. But investors believe a fall triggered by an exodus of foreigners and locals from financial markets and banks is likely.
Bank of America Merrill Lynch analyst Oyin Anubi said his clients - U.S. equity investors - feared that as sinking oil prices deplete Nigeria's war chest, a sharp correction is ahead: "Naira devaluation is fast becoming consensus," he wrote in a note.