The total balance in the domiciliary accounts in Nigeria’s commercial and merchant banks rose by more than a fifth in June, an analysis of data from the Central Bank of Nigeria (CBN) shows.
The foreign currency deposits, a chunk of which are in dollars, stood at N17.65 trillion in June, up from N10.72 trillion in May, according to the CBN data. When converted to the greenback, it rose by 21 percent to $28.92 billion (using the average exchange rate of N610.17/$ in June) from $23.20 billion; the naira averaged 462.01/$ before the devaluation in mid-June.
A further breakdown of the data also showed that the increase was driven by more deposits and devaluation, which boosted the naira value of the foreign currencies in the domiciliary accounts.
The naira has plunged to record lows across markets since the central bank allowed it to weaken by as much as 40 percent against the dollar in June.
Adeola Adenikinju, a professor of economics and president of the Nigerian Economic Society, said the boost in the naira value of deposits in domiciliary accounts was the major factor driving banks’ deposit growth.
Domiciliary accounts constitute more than a third of deposits in the banking sector and a large portion is sitting idle, according to him.