Nigeria’s financial markets have surged with renewed optimism following the country’s removal from the Financial Action Task Force grey list, TEMITOPE AINA reports
The delisting of Nigeria from the Financial Action Task Force grey list—a global index of jurisdictions with strategic deficiencies in combating money laundering and terrorist financing, has impacted positively on the local economy. The milestone decision has spurred remarkable gains in the naira, boosted foreign reserves, and reignited investor confidence, setting the stage for what analysts describe as the most positive market sentiment in nearly a decade.
The naira climbed to a 10-month high of N1,444.42 per dollar at the official market last Wednesday, while at the parallel market, it traded at N1,465 per dollar, as more dollar holders rushed to offload their positions amid improved liquidity and optimism.
Market watchers credit these developments to the Central Bank of Nigeria’s sweeping financial reforms and Nigeria’s restored credibility within the global financial system—both of which have sharply reduced speculative activity and narrowed the exchange rate gap between official and parallel markets.
The FATF’s decision to delist Nigeria from its grey list on October 24, 2025, marks a major policy victory for the government and the CBN. The FATF, a 40-member intergovernmental body backed by the World Bank and the International Monetary Fund (IMF), sets global standards for anti-money laundering and counter-terrorist financing compliance.
Countries placed on the FATF’s grey list are subject to increased scrutiny, making cross-border transactions, trade, and investment more challenging. Nigeria’s removal signals international recognition that the country has implemented substantial reforms to strengthen its financial oversight systems and law enforcement capacities.
According to the FATF report, Nigeria, alongside South Africa, Mozambique, and Burkina Faso, fulfilled all requirements to be delisted, following significant progress in risk mitigation and compliance. “Of the 139 countries reviewed since 2023, 86 have since made the necessary reforms and exited the process,” the FATF said.
This development, experts note, restores confidence among foreign investors, global correspondent banks, and development partners who had grown wary of transacting with Nigerian institutions during its grey-list tenure.
Reform momentum
Reacting to the announcement, CBN Governor, Olayemi Cardoso, described the delisting as “a strong affirmation of Nigeria’s reform trajectory and the growing integrity of its financial system.”
“The FATF’s decision reflects the coordinated efforts of key national institutions working together to deliver sustainable, standards-based reforms. Our priority now is to consolidate these gains—ensuring that compliance, innovation, and trust continue to advance hand in hand to reinforce financial stability and strengthen Nigeria’s global credibility,” Cardoso stated.
Under Cardoso’s leadership, the CBN has aggressively pursued a transparent, market-driven exchange rate regime while introducing landmark reforms that have restored policy coherence and investor trust.
Key among these are the Foreign Exchange Code—a framework establishing clear ethical, governance, and compliance standards for FX transactions—and the Electronic Foreign Exchange Matching System, which enhances transparency by providing real-time data on currency trades and market volumes.
Cardoso explained that the FX Code was designed around six principles: ethics, governance, execution, information sharing, risk management and compliance, and transaction settlement.
“The FX Code marks a new era of transparency and accountability in Nigeria’s foreign exchange market. The era of opaque practices is over. Violations will be met with sanctions under the CBN Act 2007 and BOFIA Act 2020,” he said.
Naira strengthens, reserves grow
The results have been immediate and visible. Since December 2024, when the naira traded at N1,661 per dollar, the local currency has gained over N216, or about 15 per cent—its best rally in nearly a year.
At the same time, Nigeria’s gross external reserves have grown steadily, hitting $43.10bn by October 28, 2025, compared to $40.51bn in July, representing an import cover of over eight months.
According to the CBN’s latest data, the current account surplus rose sharply to $5.28bn in the second quarter of 2025, from $2.85bn in the first quarter. This improvement reflects stronger oil earnings, growing non-oil exports, and higher portfolio inflows.
President of the Association of Bureaux De Change Operators of Nigeria, Dr Aminu Gwadabe, hailed the FATF’s decision as a “psychological and financial boost” for the naira and investors alike. “The FATF announcement has tremendously increased confidence and removed tension in the market. We’re seeing the naira appreciate as dollar holders sell off positions,” Gwadabe said.
He credited the CBN’s FX Code and consistent reforms for stabilising the market, reducing speculative trading, and deepening compliance culture among dealers.
Across Lagos and Abuja trading hubs, the once-widening gap between the official and parallel markets has narrowed sharply, reducing arbitrage and speculative behaviour that had dominated forex transactions.
A Lagos-based trader, Garuba Sarki, confirmed that the shift has been painful for speculators but beneficial for market stability. “Many dealers lost heavily as they sold below cost. The market is adjusting quickly, and the naira will likely strengthen further as more inflows arrive,” Sarki said.
The CBN’s unified exchange rate policy, combined with improved FX supply from International Oil Companies, has also boosted liquidity and confidence. Analysts note that foreign portfolio investors, who previously exited the market amid uncertainty, are now returning to take positions in government securities and equities.
According to Commercio Partners, the rally reflects a combination of stronger demand for naira assets, improved foreign reserves, and declining speculative activity.
Head of Research at the firm, Ifeanyi Ubah, observed, “Nigeria’s rising reserves and robust macro reforms signal a healthier external position. The naira’s current rally has a stronger foundation than past cycles of volatility.”
Beyond the currency market
The positive ripple effects extend beyond exchange rate stability. With Nigeria now off the FATF grey list, local banks will face fewer restrictions in opening foreign correspondent accounts—making international transactions faster, cheaper, and less cumbersome.
Corporate entities are also expected to find it easier to raise capital and establish offshore partnerships, while international lenders may revisit credit lines that had been paused due to compliance concerns.
Economists believe the development will reduce the cost of doing business, encourage foreign direct investment, and boost Nigeria’s global competitiveness.
“Grey list removal is more than symbolic; it improves Nigeria’s credibility in global finance,” said Dr Nkem Ibe, a financial analyst. “Investors and development partners now view Nigeria as compliant, transparent, and investible.”
When Cardoso assumed office in October 2023, he inherited a deeply fragmented FX system, with over $7bn in outstanding commitments and multiple exchange rate windows that had encouraged arbitrage.
“Over the past year, we unified the exchange rate, cleared backlogs, and restored transparency,” Cardoso said at the 302nd Monetary Policy Committee meeting in Abuja. “Businesses—from manufacturers to airlines—can now plan with greater confidence.”
The introduction of the Electronic Foreign Exchange Matching System has been particularly transformative. The system—widely used in advanced economies—matches buyers and sellers of foreign exchange in real time, eliminating manipulation and increasing transparency.
Additionally, the CBN lifted the 2015 restriction on 41 items previously barred from accessing foreign exchange, a policy reversal aimed at enhancing trade flexibility and attracting investment into critical sectors.
These actions have cumulatively improved liquidity, reduced speculation, and attracted portfolio inflows, helping the naira regain ground and bringing long-awaited stability to the FX market.
Future gains
Beyond the immediate market gains, Nigeria’s removal from the FATF grey list carries far-reaching implications for the economy.
Internationally, it means Nigerian banks, exporters, and fintech companies can operate with greater ease and credibility. It also signals to foreign regulators that Nigeria now meets global standards in anti-money laundering and counter-terrorist financing, reducing compliance risks for global financial institutions partnering with Nigerian entities.
Domestically, the development strengthens the country’s financial integrity, enhances the CBN’s reform credibility, and encourages stronger governance across public and private sectors.
“The delisting validates Nigeria’s determination to fight financial crimes and improve transparency,” said Professor Adewale Bamigbetan, an economist at the University of Lagos. “It will reduce the cost of capital and help attract patient investments.”
Despite the celebration, experts warn that maintaining Nigeria’s newly gained reputation will require sustained vigilance, policy discipline, and institutional consistency.
Analysts emphasise that continued success depends on maintaining macroeconomic stability, increasing crude oil production, diversifying export earnings, and strengthening regulatory enforcement.
Gwadabe of ABCON added that “the gains of the FATF delisting must be consolidated with continued adherence to compliance frameworks, deeper financial inclusion, and technology-driven oversight.”
As the CBN continues its cautious but determined march toward stability, many believe Nigeria’s financial markets are entering a new era of transparency, accountability, and confidence—one that could define the next chapter of the nation’s economic recovery.
From the trading floors in Marina to global investor circles in London and New York, the message is clear: Nigeria is back in the game, and the naira is leading the comeback story.
