This paper examines the economic effects of foreign exchange (FOREX) restriction policy in Nigeria, using a new dataset from 2009 to 2019. Using the synthetic control method (SCM), we find that, after the policy implementation, Nigeria’s per capita GDP reduced by an average of $175.72 while inflation increased by 6.3% from 2015 to 2019 compared to the synthetic control countries without such policy. Regarding the restricted items, our results indicate that the policy led to a decrease in the trade value of imported items, except for imported processed vegetables. Furthermore, our analysis emphasizes that while the FOREX restriction policy appears to align with the Central Bank’s objective of reducing the importation of domestically producible items, it also sheds light on the consequential impacts of such policies. The observed decline in GDP per capita and the complex pattern of inflation highlight the need for a sophisticated and adaptable policy strategy. Policymakers should pay close attention to the macroeconomic dynamics and promote stability and growth in the face of changing economic conditions.