Nigeria Exits FATF Grey List: Naira Soars as Foreign Reserves Cross $43 Billion
Nigeria’s financial markets have celebrated a major milestone as the country exits the Financial Action Task Force (FATF) grey list, a move signaling improved controls against money laundering and terrorist financing. The announcement has triggered a surge in investor confidence, with the naira hitting a 10-month high of N1,444.42 per dollar at official markets. Analysts attribute the rally to the Central Bank of Nigeria (CBN)-led reforms, which have bolstered market liquidity and stabilized the local currency.
The naira has continued to gain ground, reaching N1,465 per dollar in parallel markets, driven by increased dollar sales and growing demand for naira-denominated assets. Improved external reserves, which recently crossed the $43 billion mark, have further reinforced the currency’s strength. The CBN’s strategic interventions, including enhanced foreign exchange (FX) management and the electronic FX matching system, have narrowed the gap between official and parallel rates, reducing market speculation.
Experts say Nigeria’s exit from the grey list opens doors for new investment inflows, facilitates easier foreign bank account openings for businesses, and strengthens the country’s credibility in global financial markets. Dr. Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), emphasized that the move has removed tension from the market and positively impacted naira valuations. Foreign portfolio investors are also showing renewed interest, adding to the momentum in the FX market.
CBN Governor Olayemi Cardoso highlighted that the delisting reflects the success of Nigeria’s ongoing reforms and coordinated efforts to enhance transparency, compliance, and innovation within the financial system. The reforms, which began in October 2023, addressed long-standing challenges such as fragmented exchange rates, FX backlogs, and speculative trading. The introduction of the FX Code has further strengthened governance and accountability in foreign exchange operations.
While the naira rally reflects optimism and a healthier macroeconomic position, analysts caution that sustaining the momentum will depend on continued fiscal discipline, higher crude oil production, and diversification of export revenues. Nevertheless, market watchers believe the current surge has a strong foundation, underpinned by rising reserves, reduced speculation, and confidence in Nigeria’s economic trajectory, signaling a promising era for investors and businesses alike.
source: vanguard