NIGERIA’S exit from the Financial Action Task Force (FATF) grey list has triggered a wave of renewed optimism across the country’s financial markets, with the naira surging to its strongest level in nearly a year, external reserves crossing the $43 billion mark, and investor confidence returning to levels not seen since 2019.
The development, analysts said, is both a vote of confidence in Nigeria’s reform path and a validation of the Central Bank of Nigeria’s (CBN) deliberate strategy to restore stability and transparency to the foreign exchange (FX) market.
Last week, the naira rallied to ?1,444.42/$ at the official market, its best performance in ten months as dollar holders rushed to offload their positions amid rising liquidity and optimism. At the parallel market, the local currency strengthened further to ?1,465/$, gaining about 15 percent since December 2024 when trading commenced on the CBN’s Electronic Foreign Exchange Matching System (EFEMS).
At the same time, Nigeria’s foreign reserves climbed to $43.1 billion as of October 28, 2025, up from $40.5 billion recorded in July, reflecting improved inflows from foreign portfolio investors (FPIs), international oil companies (IOCs), and rising oil earnings.
Expectedly, the market responded to the new confidence shift. The positive market sentiment has been underpinned by Nigeria’s formal removal from the FATF’s list of countries with strategic deficiencies in anti-money-laundering and counter-terrorist-financing regimes.
Dr. Aminu Gwadabe, President of the Association of Bureaux De Change Operators of Nigeria (ABCON), described the FATF’s decision as ‘a massive confidence booster that has removed tension and uncertainty from the financial markets.
‘The exit from the FATF grey list has restored trust, reassured investors, and induced calm in the market. The impact is visible as the naira appreciates against the dollar and the gap between official and parallel rates continues to narrow,’ Gwadabe said.
CBN Governor Olayemi Cardoso hailed the milestone as a validation of Nigeria’s ongoing structural reforms. ‘The FATF’s decision to delist Nigeria is a strong affirmation of our reform trajectory and the growing integrity of our financial system. It reflects a clear policy direction and the coordinated efforts of key national institutions working together to deliver sustainable, standards-based reforms. Our priority now is to consolidate these gains and strengthen confidence further,’ Cardoso said.
The FATF, based in Paris and backed by the World Bank and the International Monetary Fund (IMF), is the world’s leading inter-governmental watchdog against money laundering and terrorist financing. The body sets international standards and monitors compliance among its 40 member nations.
Nigeria was placed on the grey list in February 2023 following gaps identified in supervision, enforcement, and transparency in financial transactions. The delisting, alongside that of South Africa, Mozambique, and Burkina Faso signals significant improvement in Nigeria’s compliance regime.
The FATF noted that by strengthening regulatory oversight and tightening enforcement against illicit financial flows, these countries have met the global standards required for delisting, improving their reputational standing among international lenders and investors.
For Nigeria, the removal carries far-reaching implications: it paves the way for easier cross-border transactions, improved credit ratings, lower cost of borrowing, and stronger global partnerships. Businesses are also expected to experience fewer restrictions in opening foreign bank accounts and conducting dollar-denominated transactions.
Nigeria’s renewed momentum is closely tied to the CBN’s policy reforms aimed at rebuilding confidence and restoring balance to the FX ecosystem. Since assuming office in October 2023, Governor Cardoso has prioritised key reforms, including unifying multiple exchange rates, clearing FX backlogs, introducing the FX Market Conduct Code, and launching the Electronic Foreign Exchange Matching System (EFEMS), a digital trading platform designed to enhance transparency and eliminate arbitrage opportunities.
The CBN has also lifted restrictions on 41 import items previously barred from accessing FX at the official window, a move that has improved liquidity and boosted investor confidence.
Cardoso said these steps were necessary to ‘restore transparency and fairness’ and eliminate the distortions that plagued the FX market for years. ‘We have cleared over $7 billion in outstanding foreign exchange obligations, giving businesses, from manufacturers to airlines, the confidence to plan and invest. Our next focus is to deepen reforms that make the FX market more efficient and credible,’ he noted during the recent Monetary Policy Committee (MPC) meeting.
The results are becoming evident. Nigeria’s current account balance recorded a surplus of $5.28 billion in Q2 2025, up from $2.85 billion in Q1, reflecting stronger non-oil exports, improved remittances, and rising oil receipts.
Foreign portfolio investors have started re-entering the market, encouraged by improved liquidity, a more transparent FX framework, and macroeconomic reforms. These inflows, along with CBN interventions, have helped stabilise the naira and reduce speculative activities.
In Lagos’ financial hub, Bureaux De Change operators confirm a noticeable shift in trading behaviour. ‘Many dealers are now selling at a loss because the rate is appreciating faster than they expected. Speculators who hoarded dollars earlier in the year are now offloading them, which is further strengthening the naira,’ said Garuba Sarki, a trader based in Marina.
Analysts at Commercio Partners attributed the market’s stability to a mix of improved reserve accretion, reduced speculative trading, and renewed investor optimism. Head of Research, Ifeanyi Ubah, noted that ‘Nigeria’s current rally appears more sustainable than previous cycles of temporary gains, given the healthier reserve position and stronger macroeconomic coordination between monetary and fiscal authorities.’
The introduction of the Nigeria Foreign Exchange Market Conduct Code, popularly known as the FX Code, has been one of the CBN’s most impactful reforms. The framework mandates ethical conduct, transparency, and sound governance in FX transactions, aligning Nigeria’s practices with international standards.
The Code rests on six core principles: ethics, governance, execution, information sharing, risk management and compliance, and settlement discipline. It empowers the CBN to enforce standards and penalise infractions in line with the CBN Act 2007 and the Banks and Other Financial Institutions Act (BOFIA) 2020.
Cardoso described the code as ‘a decisive step toward ending opaque practices and restoring discipline to the market,’ adding that ‘violations will attract strict penalties.’
Gwadabe of ABCON said the FX Code has also curtailed unethical behaviour among dealers and fostered stability:
‘It’s a game-changer. It enhances transparency and accountability, making the market more predictable and stable.’
Despite the upbeat outlook, experts caution that sustaining the gains will require consistent macroeconomic discipline, improved oil production, and continued focus on diversifying export earnings. They stress that the CBN must maintain tight surveillance on FX operations, deepen coordination with fiscal authorities, and continue to engage market operators to ensure reforms remain credible and transparent.
For now, however, Nigeria’s financial markets appear to be entering a new phase of confidence and stability. The naira’s rally, rising reserves, and positive investor sentiment underscore the tangible benefits of structural reform and policy consistency of the CBN.
As Nigeria consolidates its FATF delisting and continues to strengthen its financial integrity framework, the country may well be laying the foundation for a more stable, open, and globally trusted economy, one that finally converts reform rhetoric into measurable economic resilience.