Market News

By Peter Egwuatu, Assistant Business Editor

The financial markets have responded positively to the Financial Action Task Force (FATF) removal of Nigeria from its grey list of countries with money laundering and terrorist financing risks. The naira, foreign reserves and investors’ confidence have soared to new heights.

The naira hit a 10-month high of N1,444.42/$ at the official markets last Wednesday as more dollar holders offload their positions. The Central Bank of Nigeria (CBN)-led reforms in the financial markets are tipped as major consideration driving the positive market sentiments and expected investment inflows to the domestic economy.

The naira is recording strong gains following last week’s exit of Nigeria from the Financial Action Task Force (FATF) grey list.

The milestone achievement opens opportunities for investment inflows and business expansion as well as eases payment hurdles for local operators.

For several stakeholders, especially bank customers, the country is expected to witness influx of investment associated with improved business trust and confidence, make foreign bank account opening easier for businesses and supports naira’s rising competitiveness in global markets.

Already, the naira has continued to record significant gains, appreciating to record N1,465/$ at the parallel markets.

At the official window, the naira hit a 10-month high of N1,444.42/$ on Wednesday, as dollar holders continued selling down their positions and increasing exposure to naira-denominated assets.

The sustained appreciation of the local currency has been supported by improved market liquidity and renewed optimism in the economy, leading to rising capital inflows and stronger external reserves.

The naira position represents a gain of N216.70 or about 15 percent compared to the N1,661.12 per dollar recorded in December 2024, when trading commenced on the Electronic Foreign Exchange Matching System (EFEMS).

On day-to-day basis, the naira strengthened by 0.3 per cent, appreciating from N1,448.20 per dollar on Tuesday to N1,444.42 on Wednesday, according to data from the Central Bank of Nigeria (CBN) data showed.

The gross foreign reserves also hit $43.10 billion on October 28, 2025,  significantly supporting the local currency.

President, Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, said: “The recently announcement of the Financial Action Task Force on the Exist of Nigeria from its Grey list known as Dirty money list on Friday the 24th of October 2025 as result of Nigeria preparedness on remediating their 40 recommendations have tremendously induced confidence, and removed tension in the market”.

“The impacts reflecting plausibly as naira appreciate against dollars with N10/$,” he added.

CBN reacts

Commenting on the announcement, Central Bank of Nigeria Governor, Olayemi Cardoso, said: “The FATF’s decision to remove Nigeria from the grey list 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, ensuring that compliance, innovation, and trust continue to advance hand in hand to reinforce financial stability and strengthen Nigeria’s global credibility.”

The FATF leads global action to tackle money laundering, terrorist and proliferation financing.

The 40-member body, which has the backings of the World Bank Group and International Monetary Fund (IMF) sets international standards to ensure national authorities can effectively go after illicit funds linked to drugs trafficking, the illicit arms trade, cyber fraud and other serious crimes.

For Nigeria, exiting FATF grey list, opened her potential in the global financial markets. The FATF leads global action to tackle money laundering, terrorist and proliferation financing.

The 40-member body, which has the backings of the World Bank Group and International Monetary Fund (IMF) sets international standards to ensure national authorities can effectively go after illicit funds linked to drugs trafficking, the illicit arms trade, cyber fraud and other serious crimes.

The Paris-based watchdog’s decision represents a huge progress for Nigeria financial system as it works to restore investor confidence, reduce the cost of capital and strengthen financial system credibility.

Countries removed from grey list

Other countries removed from the list include, South Africa, Mozambique and Burkina Faso.

“As of February 2025, the FATF has reviewed 139 countries and jurisdictions and publicly identified 114 of them. Of these, 86 have since made the necessary reforms to address their AML/CFT weaknesses and have been removed from the process,” the report said.

FATF identifies countries or jurisdictions with serious strategic deficiencies to counter money laundering, terrorist financing, and financing of proliferation.

“For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system from the ongoing money laundering, terrorist financing, and proliferation financing risks emanating from the country,” it said.

By closing gaps in regulatory oversight and enhancing enforcement against illicit financial flows, the four nations have now met the FATF’s requirements for delisting, boosting their standing among global financial institutions and capital markets.

Nigeria and South Africa were added to the list in February 2023 while Mozambique was included in October 2022 and Burkina Faso initially in February 2021.

The milestone achievement opens opportunities for investment inflows and business expansion as well as eases payment hurdles for local operators.

Forex reforms

Forex reforms instituted by the Central Bank of Nigeria (CBN) under the leadership of Olayemi Cardoso are now yielding great benefits from reduction in forex speculation and narrowing of gaps between official and parallel markets.

The CBN leadership has continued to take major steps to keep the naira stable in line with its exchange rate stability objective. The apex bank is boosting FX supply to retail end users, reducing distortions in the market and maintaining effective foreign reserves management and accretions.

The injection of liquidity into the market and rising compliance with FX regulations have reduced sharp depreciation of the naira at official and parallel markets and buoyed foreign investors interest on domestic economy.

The naira stability is also driven by inflows from Foreign Portfolio Investors (FPIs), substantial contributions from International Oil Companies (IOCs), and the CBN’s interventions to authorised dealers.

There is also renewed interest of Foreign Portfolio Investors (FPIs) in the FX market—driven by improved market confidence, a more efficient FX framework, and strengthening macroeconomic conditions.

The impact is rise in foreign reserves and steady dollar inflows. The CBN chief Cardoso recently announced that gross external reserves remained robust at $43.05 billion on September 11, 2025, compared with $40.51 billion at end-July 2025 with an import cover of 8.28 months.

“Similarly, the second quarter 2025 current account balance recorded a significant surplus of $5.28 billion compared with $2.85 billion in first quarter of 2025,” Cardoso stated during the 302nd monetary policy committee meeting held this week in Abuja.

Aside the naira gaining more ground, speculative activities in the FX market has declined.

A Bureaux De Change (BDC) trader based in Marina, central Lagos, Garuba Sarki, said many dealers lost huge funds as they sold below purchase rates as exchange rate gap narrowed.

“I know some BDC operators that sold dollars below the purchasing rate. This is expected to continue in the weeks ahead. Also, the expected dollar inflows to the economy will help strengthen the naira position against the dollar,” he said.

Gwadabe, attributed the ongoing stability of the naira against dollar and other world currencies to the CBN’s  policies.

For him,  key policies like the Foreign Exchange (FX) Code, rising investors confidence, and foreign direct investment supporting policies are effectively putting FX speculators in check.

He said the FX Code implementation is comprehensively addressing various aspects of market conduct and practices.

For instance, the policy authorises the CBN to establish and enforce directives regarding the standards for financial institutions under which FX deals are to be conducted.

Gwadabe said the code further entrenches transparency and accountability in the FX market, and continually sustain naira stability and rally.

Analysts at Commercio Partners, attributed the rally and gradual narrowing of the exchange rate gap to a combination of stronger demand for the naira, reduced speculative trading, and improved foreign reserves.

Head of Research at Commercio Partners, Ifeanyi Ubah, expressed optimism that the positive sentiment would be sustained in the near term, supported by increasing external buffers.

“Nigeria’s rising external reserves are reflecting a healthier external position for the country. With reserves strengthening, speculative activity subsiding, and oil earnings supporting inflows, many market watchers believe the naira’s current rally has a stronger foundation compared to previous cycles of volatility,” he said.

However, other experts caution that sustaining this momentum will depend on the government’s ability to maintain macroeconomic discipline, boost crude oil production, and diversify export earnings.

Cardoso had upon assuming office in October 2023, prioritized reforms to rebuild Nigeria’s economic buffers and strengthen resilience. In the foreign exchange market, the apex bank faced a backlog of over $7 billion in unfulfilled commitments and a fragmented FX regime characterized by multiple forex rates, which had encouraged arbitrage opportunities.

“Over the past year, we have undertaken critical reforms to unify Nigeria’s exchange rate, eliminating distortions and restoring transparency. This unification has enabled us to clear the outstanding foreign exchange obligations, giving businesses—ranging from manufacturers to airlines—the confidence to plan and invest in the future. To further enhance the functionality of the foreign exchange market, we are introducing an electronic FX matching system, which has proven effective in other markets,” Cardoso said.

The CBN boss, had at the launch of the Nigeria Foreign Exchange Code (FX Code), emphasised integrity, fairness, transparency, and efficiency as critical pillars for driving Nigeria’s economic growth and stability.

He said that the FX Code was built on six core principles: ethics, governance, execution, information sharing, risk management and compliance, as well as confirmation and settlement processes.

These principles, he explained, aligned with international standards while addressing the unique challenges within Nigeria’s foreign exchange market.

According to Cardoso, “The FX Code represents a decisive step forward, setting clear and enforceable standards for ethical conduct, transparency, and good governance in our foreign exchange market. The era of opaque practices is over. The FX Code marks a new era of compliance and accountability. Under the CBN Act 2007 and BOFIA Act 2020, violations will be met with penalties and administrative actions.”