The value of the naira has appreciated in the official and unofficial foreign exchange markets following reports that Nigeria was removed from the Financial Action Task Force (FATF) grey list.

FATF is an intergovernmental organisation established to develop and promote policies that protect the global financial system against money laundering, terrorist financing, and the financing of weapons of mass destruction.

Nigeria's removal from the FATF grey list means it has successfully addressed the weaknesses in its systems for preventing money laundering, terrorist financing, and proliferation financing that the FATF previously identified.

Nigeria was added to the FATF grey list in February 2023 due to weaknesses in its financial oversight and enforcement mechanisms.

The Central Bank of Nigeria (CBN), Nigerian Financial Intelligence Unit (NFIU), and Economic and Financial Crimes Commission (EFCC) were among the agencies credited for spearheading reforms that led to compliance.

Naira appreciates

Bismarck Rewane, CEO of Financial Derivatives Company, said the delisting had an immediate impact on the foreign exchange market.

He said:

“It means a whole lot. Naira and Rand have gained almost one percent since the news. It is now N1,490 in the parallel market."

Also speaking, Tayo Oviosu, CEO of fintech firm Paga, said:

“This is a big deal because it opens up the country for FDI and engagement from the West, especially."

Similarly, Tayo Aduloju, CEO of the Nigerian Economic Summit Group (NESG), commended the coordinated efforts that led to the milestone, BusinessDay reports.

He said: “Well, first it’s a well done to CBN, NFIU and EFCC for doing the hard work to get us back into compliance."

Expectations for naira

Analysts say the FATF decision could improve Nigeria’s global financial reputation, ease cross-border transactions, and attract new investments at a time when the government is seeking to stabilise the naira and rebuild investor confidence.

Naira is also expected to appreciate further as foreign exchange reserves continue to rise, giving CBN more firepower to defend Nigerian currency against pressure.