Nigeria: FATF Grey List Exit Boosts Naira as Reserves Surpass $43bn – CBN

Nigeria’s financial markets have surged on the back of the Financial Action Task Force (FATF)’s decision to remove the country from its grey list, with the naira, external reserves, and investor confidence all recording significant gains. Market analysts say the development—combined with ongoing Central Bank of Nigeria (CBN) reforms—has strengthened positive sentiment and opened the door to renewed foreign investment.

The naira climbed to a 10-month high of N1,444.42/$ at the official market last Wednesday, while parallel market rates also appreciated to N1,465/$, driven by improved dollar liquidity and an uptick in foreign inflows. Many currency holders have continued to unwind long positions, shifting back into naira assets as confidence improves.

The currency’s rebound represents a sharp improvement from N1,661.12/$ in December 2024, when trading opened on the Electronic Foreign Exchange Matching System (EFEMS). Day-on-day, the naira appreciated by 0.3 per cent—from N1,448.20/$ on Tuesday to N1,444.42/$ on Wednesday—according to CBN data.

Reserves Rise as Market Confidence Rebuilds

Nigeria’s external reserves rose to $43.10bn as of October 28, 2025, supported by stronger portfolio inflows, International Oil Company (IOC) conversions, and tightened FX market discipline. CBN Governor Olayemi Cardososaid the FATF’s decision validates the Bank’s reform agenda and highlights the “growing integrity” of Nigeria’s financial system.

“This delisting is a strong affirmation of our reform trajectory,” Cardoso said. “Our priority now is to consolidate these gains—ensuring that compliance, innovation and trust advance hand in hand to reinforce financial stability and strengthen Nigeria’s global credibility.”

The FATF grey list identifies jurisdictions with strategic deficiencies in anti-money laundering and counter-terrorist financing controls. Nigeria was added to the list in February 2023. Its exit follows extensive remediation efforts across regulatory and law enforcement agencies.

The FATF’s latest review shows that out of 139 countries assessed since 2025, 86 have successfully completed required reforms and been delisted, including South Africa, Mozambique, and Burkina Faso—all removed alongside Nigeria.

Stakeholders See Improved Business Conditions

The President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, said the announcement has “induced market confidence and reduced tension,” noting that the naira appreciated by roughly N10 immediately after the FATF confirmation.

Business leaders and bank customers also expect the development to ease cross-border payments, simplify foreign account openings, and lift Nigeria’s risk perception in global finance.

A Lagos-based BDC trader, Garuba Sarki, confirmed that speculation is moderating rapidly. “Some BDC operators even sold dollars below purchase rate as the gap narrowed. Dollar inflows in the coming weeks will further strengthen the naira,” he said.

CBN Reforms Continue to Anchor FX Stability

The rally comes amid sweeping FX reforms under Cardoso, aimed at restoring transparency, reducing arbitrage, and strengthening Nigeria’s external buffers. Key measures include:

• Unifying the exchange rate structure

• Clearing more than $7bn in inherited FX backlogs

• Introducing the FX Matching System to improve price discovery

• Launching the Nigeria Foreign Exchange Code (FX Code), built on global standards of ethics, transparency and market conduct

• Enhancing enforcement to curb speculative trading

Cardoso said recent gains are also supported by improved macroeconomic indicators, including a current account surplus of $5.28bn in Q2 2025, up from $2.85bn in Q1.

He emphasised that the FX Code—which establishes clear rules on governance, execution, risk management and settlement—is central to ending opaque market practices. Violations, he warned, will attract sanctions under the CBN Act 2007 and BOFIA 2020.

Analysts Predict Cautious Optimism

Analysts at Commercio Partners attribute the naira’s rally and narrowing spread to stronger demand for the local currency, improved reserves, and weaker speculative positions. The firm’s Head of Research, Ifeanyi Ubah, said rising external buffers give the naira “a firmer foundation than in previous cycles.”

However, economists caution that sustaining the momentum will depend on:

• Maintaining macroeconomic discipline

• Expanding crude oil production

• Accelerating non-oil export diversification

Momentum Builds Ahead

With Nigeria’s removal from the FATF grey list, rising reserves, and ongoing regulatory reforms, policymakers say the country is better positioned to attract fresh investment and improve global market perception.

For domestic operators, the stronger naira, deeper liquidity, and improved compliance environment signal a turning point—one that market stakeholders hope will help restore stability and rebuild the economy’s resilience.