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The short answer
Your return in Canadian dollars is roughly (1 + naira return) x (1 - fall in the naira's CAD value) - 1. On an example 18% naira return, a 10% fall in the naira cuts the CAD return to about 6.2%, and a fall of about 15.3% wipes it out entirely; after 10% Nigerian withholding on the interest, the break-even fall is about 13.9%.
High naira yields are real: the CBN's 7 October 2026 auction cleared the 364-day Treasury bill at a 15.85% stop rate, which works out to a return of roughly 18.8% on the money invested. But a Canada-based investor spends Canadian dollars, so the number that matters is what the naira return is worth once converted back. That depends on the exchange rate at the end, not at the start.
The formula
If r is the naira return over a period and f is the fall in the naira's value against the Canadian dollar over the same period, your CAD return is:
A fall of f means each naira buys f fewer Canadian dollars. Example: if ₦1,000 bought CAD 1 at the start and ₦1,250 is needed at the end, the naira has lost 20% of its CAD value (1,000 ÷ 1,250 = 0.8). The break-even fall, where the CAD return is zero, is r ÷ (1 + r).
A one-year example
Example only: a naira return of 18% for one year, before and after 10% Nigerian withholding on the interest (16.2% net). Since late 2025 Nigerian tax authorities have directed withholding on interest from short-term securities, T-bills included.
| Fall in naira vs CAD over the year | CAD return at 18% | CAD return at 16.2% after WHT |
|---|---|---|
| 0% | 18.0% | 16.2% |
| 5% | 12.1% | 10.4% |
| 10% | 6.2% | 4.6% |
| 15.25% | 0.0% | -1.5% |
| 20% | -5.6% | -7.0% |
| 30% | -17.4% | -18.7% |
Before Canadian tax, the break-even fall is 0.18 ÷ 1.18 = 15.3%; after withholding it is 0.162 ÷ 1.162 = 13.9%. Canadian tax on the interest, less the foreign tax credit, lowers it further. In our GIC versus T-bill example, at a 30% marginal rate and against a 3.5% GIC, the break-even fall is about 9%.
Over several years
Example only: 18% a year compounded for three years turns ₦100 into about ₦164.30. If the naira also falls 10% a year, its CAD value after three years is 0.9 x 0.9 x 0.9 = 72.9% of the start. The CAD result is 1.643 x 0.729 = 1.198, a 19.8% gain over three years, about 6.2% a year. A Canadian deposit at an example 3.5% compounded gives 10.9% over the same period. The gap is narrower than the headline yields suggest, and it reverses if the naira falls faster.
Why naira moves dominate
- Exchange-rate moves can be large and sudden; a single adjustment can outweigh several years of interest. For the history, see the naira's official exchange rate history.
- High nominal naira rates usually reflect high inflation in Nigeria, which is the same force that tends to weaken the currency over time.
- Every round trip costs a margin on each conversion against the mid-market rate, plus fees. On a one-year investment those costs come straight off the return.
- In Canada, gains and losses on naira assets are measured in Canadian dollars, so currency moves feed directly into your tax figures. See a naira fall and a Canadian capital loss.
When the naira rises
The formula works in both directions. If the naira strengthens, say by 5% against the Canadian dollar over the year, an 18% naira return becomes 1.18 x 1.05 - 1 = 23.9% in CAD. Periods of naira strength do happen, but planning on one is a bet on the currency, not an investment decision about the bill or deposit itself.
What to check first
- Find the current naira rate on the instrument from an official source such as the CBN or DMO, and turn a discount rate into a yield.
- Subtract withholding and an estimate of your net Canadian tax.
- Work out the break-even fall with r ÷ (1 + r) on that net return.
- Compare it with how far the naira has moved over periods of the same length in the past.
- Add the cost of converting in and out.
Ways investors manage it
- Hold naira only for naira spending: family support, school fees, a building project. Then the exchange rate matters less because you would convert anyway.
- Use dollar-denominated Nigerian instruments if you want Nigerian exposure without naira risk; they come with their own credit and liquidity risks.
- Keep naira terms short so you are not locked in through a sharp adjustment.
- Decide in advance the fall you can tolerate and compare it with the break-even in your own numbers.
Where Pryme fits
Pryme keeps money in the currency it arrived in, and Swap converts only when you choose, showing the rate and the fee before you approve. That lets you hold naira for naira needs and keep the rest in USD, GBP or EUR. Naira Savings Boxes earn at rates shown in the app, and the same currency arithmetic applies to them. Open an account from Canada.
Questions people ask
How do I calculate my return in CAD on a naira investment?
Multiply one plus the naira return by one minus the fall in the naira's CAD value, then subtract one. A rise in the naira works the same way in reverse.
How much can the naira fall before my investment loses money in CAD?
The break-even fall is the naira return divided by one plus that return: about 15.3% for an 18% return before tax, about 13.9% after 10% withholding.
Are high Nigerian interest rates worth it for someone in Canada?
Only if the naira does not fall by more than the break-even over your holding period, after tax and conversion costs.
Does a falling naira affect my Canadian taxes?
Yes. CRA measures gains, losses and income in Canadian dollars at the rates on the relevant dates, so naira moves change the figures you report.
Sources
- Nairametrics: DMO raises N968.47 billion as 364-day stop rate falls to 15.85% (7 Oct 2026) · accessed Oct 2026
- KPMG TaxNewsFlash: Nigeria guidance on withholding tax on interest from short-term securities (4 Dec 2025) · accessed Oct 2026
- CRA: Guide T4037, Capital Gains 2025 (modified 11 Feb 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.