The Glasgow rivals meet in Sunday's Scottish Cup semi-final and Deila acknowledges Rangers are a better side than the one Celtic beat 2-0 last year.
"We know when we are playing at our best that we can beat anybody and Rangers as well," said Deila.
"I'm really looking forward to it. It's my fourth semi-final. It's the biggest cup and one we haven't won in my time."
Deila picked up the League Cup last season, with Celtic easing past Rangers in a one-sided semi-final.
This term, Rangers have run away with the Championship title and Deila has been impressed by the work done by opposite number Mark Warburton.
Despite a few domestic wobbles and another poor showing in Europe, the Norwegian insists his team have not regressed in his second season.
"We are top of the league, they are top of the league, so they are a better team than they were last year, that's for sure, because they didn't win the league last year," said Deila.
"Rangers is a big club. They have the second highest budget in the country, so of course it should be a big fight.
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"But right now we are the best team in Scotland and that is something we should be proud of and it gives us a lot of confidence.
"We are looking forward to it, but at the same time we have to be really focused and avoid stupid mistakes."
Celtic missed out at this stage last season, losing goalkeeper Craig Gordon to a red card early in the second half as Inverness CT won 3-2 victory in extra time.
Another red card was to prove costly in the last four of the League Cup in January as Efe Ambrose was sent off against Ross County, who recovered from the loss of an early goal to triumph 3-1.
"We have trained the whole week with 10 men", joked Deila before stressing the need to remain calm during what could be a typically feisty derby.
"It is so important to keep everyone on the pitch, but you never know in football, it could also be that we play 11 against 10 the other way.
"You have to prepare for every scenario. We have experience of playing 11 against 10 and hopefully now we are going to play 11 against 11.
"We have to play aggressively but at the same time be very controlled."
Hibernian face Dundee United in the first semi-final on Saturday.
Manager Ronny Deila says no Scottish team can beat Celtic if they play to their potential, including Rangers.