Deutsche Bank has added Nigeria to its frontier foreign exchange monitor, signalling growing investor interest in the naira as the German lender sees potential for further appreciation against the US dollar.
According to a report by Bloomberg, strategists and economists at the Frankfurt-based bank consider the naira undervalued, with attractive interest-rate differentials and favourable real yields supporting its appeal to foreign investors.
The assessment comes as Nigeria’s currency records modest gains and international investors reassess opportunities in the country’s local-currency assets. The naira appreciated by 0.45% against the dollar in September, strengthening from N1,335.50/$ at the end of August to N1,329.50/$ at the end of September.
Despite its positive outlook, Deutsche Bank warned that rising government borrowing could undermine the naira’s performance.
“The principal risk to the outlook is from the fiscal side,” the bank said on Monday, pointing to the Debt Management Office’s bond issuance calendar for the quarter, which signals “elevated issuance levels.”
FTSE Russell Upgrades Nigeria to Frontier Market Status
Deutsche Bank’s decision follows FTSE Russell’s reclassification of Nigeria from Unclassified to Frontier Market status, effective September 21, 2026.
Nigeria was removed from FTSE Russell’s Frontier Market indices in September 2023 after persistent difficulties with foreign exchange transactions and the repatriation of capital by international investors.
The index provider subsequently acknowledged improvements in Nigeria’s foreign exchange market and the clearance of outstanding foreign exchange backlogs before approving the country’s return to Frontier Market status.
The reclassification could improve Nigeria’s visibility among international investors whose portfolios track or benchmark against frontier-market indices.
