The naira closed October on a high note, finishing the month at N1,422 to the dollar at official markets, a performance analysts say reflects renewed market confidence after Nigeria’s removal from the Financial Action Task Force (FATF) grey list.
Data from the Central Bank of Nigeria (CBN) showed the naira reached an intramonth peak of N1,444.42/$ at official windows last Wednesday as more dollar holders offloaded positions. Parallel market rates also moved in the local currency’s favour, with dealers reporting rates around N1,465/$ at peak points.
Market participants attribute the rally to a combination of factors: the FATF decision on October 24, which signalled progress on anti-money laundering and counter-terror financing reforms; recent CBN policy measures, including the Foreign Exchange (FX) Code; and improving external buffers, notably gross foreign reserves of $43.10 billion as of October 28.
“The FATF announcement has tremendously induced confidence and removed tension in the market,” said Dr. Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON). He added that the exit from the grey list, following Nigeria’s remediation of the watchdog’s recommendations, is already reflecting in exchange-rate behaviour.
CBN Governor Olayemi Cardoso welcomed the FATF decision as validation of the bank’s reform agenda. “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,” Cardoso said, urging continued compliance and consolidation of the gains.
On the trading floor, investors and dealers said improved liquidity and the narrowing gap between official and parallel rates reduced opportunities for speculative arbitrage. “Many dealers lost funds when they sold dollars below purchase rates as the gap narrowed,” said Garuba Sarki, a BDC trader in Lagos’ Marina district. He expects continued inflows in the weeks ahead to further support the naira.
Analysts at Commercio Partners also pointed to stronger foreign portfolio flows, steady oil receipts and CBN interventions as key drivers of the appreciation. “With reserves strengthening and speculative activity subsiding, the naira’s current rally has a stronger foundation compared to previous cycles of volatility,” said Ifeanyi Ubah, Head of Research.
The CBN’s recent market reforms — notably the FX Code and the Electronic Foreign Exchange Matching System (EFEMS) — were designed to increase transparency, reduce speculation and improve market functioning. The FX Code sets standards for how FX deals are conducted, while EFEMS provides real-time pricing and matching to curb distortions that previously created multiple forex rates.
Despite the encouraging trends, some experts urged caution. Sustaining the momentum, they said, will depend on continued macroeconomic discipline, higher crude oil output and broader export diversification to support durable inflows.
For ordinary Nigerians and businesses, the improving exchange rate could ease the cost of importing raw materials and inputs, make foreign bank account openings less fraught and generally boost confidence among foreign investors considering the market.
As policymakers work to consolidate reforms, the immediate market reaction suggests that international validation — like the FATF delisting — combined with domestic policy action can rapidly shift sentiment and translate into measurable gains for the naira.
