Global Markets Daily High Energy Carrying Returns in EM Frontier — KZT and NGN Stocktake

Economics Research 17 September 2026 | 10:34AM BST

Global Markets Daily: High Energy Carrying Returns in EM Frontier — KZT and NGN Stocktake

n Currencies of oil-exporting Frontier currencies have benefited from a Victor Engel | combination of higher-for-longer energy prices and particularly elevated Goldman Sachs International carry-to-vol ratios relative to EM HY counterparts so far this year. In this Global Markets Daily, we take stock of the recent dynamics of the Kazakhstan Tenge (KZT) and the Nigerian Naira (NGN) and reiterate our constructive view on both currencies. n After the recent move stronger, we continue to recommend being long the Tenge, more because of prospects of accumulating elevated carry returns against a rangebound spot rate than for outsized spot returns. NDF-implied yields are particularly attractive and are high relative to history, which is significant given the dovish inflation backdrop our economists expect. While the currency’s recent run stronger has overshot our model predictions, we see a floor to spot levels thanks to an elevated oil beta in a higher-for-longer energy price world and continued foreign inflows. n In contrast, we see more potential for spot upside in the Naira. Even though it has traded somewhat in line with its year-to-date terms-of-trade improvement and has strengthened recently, it remains deeply undervalued according to our GSDEER model. Further, we had argued that the central bank was likely leaning against currency appreciation by remaining in reserve-accumulation mode, a policy choice that is proving increasingly costly. Alongside potential spot returns, the Naira remains an attractive carry long given real OMO yields near historical highs. n Reflecting this view, we roll our three- and six-month USD/NGN forecasts stronger to 1,300 and 1,275, respectively (from 1,325 and 1,300 previously), and maintain our 12-month forecast at 1,250, which remains significantly more bullish than forwards. More generally, we extend the target of our trade recommendation to be long TRY, NGN and KZT against the USD to 12% (from 10% previously) and tighten the stops accordingly.

High Energy Carrying Returns in EM Frontier — KZT and NGN Stocktake

Currencies of oil-exporting Frontier currencies have benefited from a combination of higher-for-longer energy prices and particularly elevated carry-to-vol ratios relative to EM HY counterparts so far this year. In this Global Markets Daily, we take stock of the recent dynamics of the Kazakhstan Tenge (KZT) and the Nigerian Naira (NGN)

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Goldman Sachs Global Markets Daily

and reiterate our constructive view on both currencies. Reflecting this view, we roll our USD/NGN forecasts stronger and extend the target of our trade recommendation to be long TRY, NGN and KZT against the USD.

Frontier oilers’ performance well-supported by high energy prices and elevated carry-to-vol Amid high and sticky oil prices, currencies of oil-exporting economies have generated healthy spot returns so far this year. COP has been the outperformer within this group by a margin, followed by KZT and NOK, with year-to-date spot returns in excess of 10% (Exhibit 1). Within the Frontier space, the flip side of this steady performance is that the Kazakhstan Tenge’s GSDEER valuation buffer has been deteriorating since the start of the Iran war, whereas the Nigerian Naira’s relatively more modest spot returns have kept it among the most undervalued currencies in our Frontier coverage (Exhibit 2). We think the energy price backdrop will continue to support KZT and NGN spot returns given our expectation for higher-for-longer oil prices on the back of our assumption that Mideast shipping disruptions continue into 2027.

Exhibit 1: Oil exporters’ currencies have generated healthy Exhibit 2: ... Which has been reflected into eroding spot returns year to date, in a world of higher-for-longer GSDEER valuation buffers for KZT oil prices ... Daily indexed spot returns, computed against USD

Index (Jan2026 = 100)…