On 19 October, Deutsche Bank added Nigeria to its frontier currency monitor, alongside Angola and Ghana, and said it sees the naira as undervalued. The naira closed September at ₦1,329.50 to the dollar and was trading around ₦1,333 a day later.
Why the bank likes it:
Deutsche Bank's strategists point to a mix of high returns and better plumbing.
Real interest rates. The policy rate is 23%, well above inflation of around 14%, so investors earn a return even after rising prices.
The carry trade. Foreign investors can borrow cheaply in dollars, buy naira assets that pay far more, and pocket the gap while the currency stays steady.
Oil and dollars. Higher crude prices have strengthened Nigeria's external position, and dollars are easier to find than they were two years ago.
Back on the map. FTSE Russell restored Nigeria to its Frontier Market index from 21 September, three years after removing it. That puts Nigeria in front of funds that track those benchmarks.
The catch:
The bank is clear about where the danger lies. "The principal risk to the outlook is from the fiscal side," it said, pointing to "elevated issuance levels" in the Debt Management Office's bond calendar for the quarter.
Government spending is also expected to rise ahead of the presidential election on 16 January 2027. Deutsche Bank sees "less risk from the elections themselves" than from the spending around them.
Two more things could slow the naira: the usual rush of import payments in the last quarter of the year, and the central bank's September cut to its policy rate, which narrows the gap that attracts foreign money in the first place.
What it means for you:
A big global bank putting the naira on its watchlist matters because its clients follow. More foreign money buying naira assets should help keep the currency steady in the short term, and it has already lifted returns on Nigerian stocks and local bonds.
The flip side is that this money moves fast. If government borrowing climbs or rates fall too far, the same investors can leave just as quickly. For anyone holding dollars and waiting for a weaker naira, the message from Deutsche Bank is that the wait may be longer than they think.