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CBN report indicates dropping propensity to save in banks as recession bites harder

Latest Depository Corporation Survey (DCS) for the month of February 2017 recently published by the Central Bank of Nigeria (CBN) has shown sharp drop in current accounts deposits, an indication that commercial banks are experiencing lull in volume of deposits by customers.

The report show that total current account deposits fell by N1tn within the period under review.

Other aspects covered by the survey include total demand (current account) deposit of banks which also dropped by 10.75 per cent to N8.6 trillion in February from N9.636 trillion in January.

Besides, currency outside the banks declined month-on-month (m-o-m) by 1.16 per cent to N1.61 trillion. Consequently, Narrow money supply declined m-o-m by 9.36 per cent (and 11.35 per cent year-to-date, y-t -d) to N10.21 trillion.

Broad money supply, M2, moderated month-on-month by 4.34 per cent to N22.37 trillion following a 0.46 per cent increase in Net Domestic Assets (NDA) to N13.82 trillion and an 11.21 per cent decline in Net Foreign Assets (NFA) to N8.55 trillion.

The rise in NDA followed a 0.54 per cent m-o-m increase in Net domestic credit to N26.77 trillion which more than offset a 0.62 per cent increase in other liabilities (net) to N12.95 trillion.

Observers say the appreciation was triggered by combination of decline in dollar demand and further injection of dollars by the CBN. Bureaux De Change (BDC) operators told Vanguard there is little dollar demand in the market, while people who had hitherto horded dollar are offering them for sale to avoid further financial loss.

Last week, the CBN injected $264.3 million dollars comprising $181.3 million for 60 days forwards transaction and $83 million to meet customers demand for personal travel allowance, business travel allowance, school fees and other invisible transactions.