Deutsche Bank strategists say the Nigerian naira is undervalued and poised to strengthen against the US dollar, adding the West African nation to its frontier foreign exchange monitor. The Frankfurt-based lender points to favorable real rates and attractive carry as key factors, noting the currency has already ranked in the top 10 globally with nearly 8% appreciation this year. While acknowledging elevated fiscal risks from the debt management office's bond issuance, the bank expects less risk from Nigeria's upcoming January polls.
The naira was trading at 1,332 per dollar on Monday. Deutsche Bank also tracks other African currencies like Angola's kwanza and Ghana's cedi, which have benefited from strong economic conditions, high real interest rates, and ample foreign exchange reserves despite global headwinds. Elevated crude prices have further supported current-account positions for Nigeria and Angola.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing