Nigeria's economy is currently experiencing significant developments, impacting its foreign reserves and overall financial stability. Recent events, such as the country's removal from the Financial Action Task Force (FATF) grey list, coupled with robust economic reforms, are influencing the nation's financial landscape.
The Central Bank of Nigeria (CBN) has been actively taking steps to stabilize the naira, aligning with its exchange rate stability objective. These reforms reflect the bank's commitment to fostering an environment conducive to inclusive economic development.
The challenge of Economic Reforms in Nigeria
Nigeria's Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, highlighted the progressive growth of the Nigerian economy. According to him, Nigeria’s GDP grew by 4.23 per cent in Q2 2025, the strongest expansion in a decade outside the post-COVID-19 rebound.
He disclosed that 13 sectors expanded by more than 7 per cent, up from nine in the previous quarter, evidence of broad-based resilience. The ongoing reforms, though challenging, are driven by a clear objective to build a competitive economy that creates jobs and lifts millions out of poverty.
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Naira Stability and Market Confidence
The naira has shown remarkable stability, particularly following Nigeria's exit from the FATF grey list. 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 remains relatively stable following recent exit of Nigeria from the Financial Action Task Force (FATF) grey list. The naira hit a 10-month high of N1,444.42/$ at the official markets nearly two weeks ago as more dollar holders offload their positions.
On the 17th of the month, the naira hit its lowest value of the month at 1,475.35/$. “The steady inflow of foreign funds strengthened supply conditions across key benchmarks, resulting in a consistent appreciation of the naira as USD availability outpaced demand.
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.
FATF Removal and Global Financial Markets
For Nigeria, exiting FATF grey list, opened her potential in the global financial markets. 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.
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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.
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.
Factors Influencing Foreign Reserves
Several factors have contributed to the improvement of Nigeria's foreign reserves:
- External Sector Resilience: A key driver behind this performance has been the resilience of the external sector, even amid relatively weak global oil prices.
- Import Contraction and Export Receipts: “We attribute this improvement to a sharp contraction in imports and a modest increase in export receipts. The narrowing of the import bill has helped reduce foreign exchange demand pressures, creating room for the naira to strengthen.
- Eurobond Issuance: “The Federal Government of Nigeria returned to the international debt market with a $2.3bn Eurobond offer.
“Nigeria’s rising external reserves are reflecting a healthier external position for the country.
The CBN leadership has continued to take major steps to keep the naira stable in line with its exchange rate stability objective. The EFEMS was meant to check forex market distortions, eliminate speculative activities and instill transparency.
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Foreign Exchange Reserves Data
Recent data indicates positive trends in Nigeria's foreign exchange reserves:
- October 2025: Foreign Exchange Reserves in Nigeria increased to 43150 USD Million.
- September 2025: Reserves were at 42260 USD Million.
Foreign Exchange Reserves in Nigeria averaged 14166.79 USD Million from 1960 until 2025, reaching an all time high of 62081.86 USD Million in September of 2008 and a record low of 63.22 USD Million in June of 1968.
International reserves were worth USD 40.9 billion in 2024, compared to USD 32.9 billion in2023, and USD 34.5 billion 10 years ago. Reserves averaged USD 36.1 billion over the last decade.
“We project 2025 FX reserves to reach $45.0bn by the end of the year.
Here is a table summarizing the recent trends in Nigeria's Foreign Exchange Reserves:
| Month | Foreign Exchange Reserves (USD Million) |
|---|---|
| September 2025 | 42,260 |
| October 2025 | 43,150 |
| Projected for 2025 End | 45,000 |
Eurobond Offer and Investor Confidence
“Coupons of 8.62 per cent and 9.13 per cent were set, respectively. The robust demand at the auction indicates that investors are confident in Nigeria’s macroeconomic narrative.
“On one hand, the inflow boosts external reserves, provides fiscal breathing space, and enhances the government’s capacity to meet short-term obligations. Importantly, the new Eurobond issuance does not alter our debt outlook for the year, as the planned borrowing was already factored into our projections. The international bookrunners for the transaction were Citi (Billing and Delivery), Goldman Sachs International, J.P.
“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. 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.
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