The total balance in Nigeria's domiciliary accounts, which are accounts that hold foreign currency, increased by more than 20% in June, from N10.72 trillion to N17.65 trillion. This was driven by a combination of increased deposits and the devaluation of the naira.
When converted to US dollars, the balance of domiciliary accounts increased from $23.2 billion to $28.92 billion. This is a 21% increase, even though the naira averaged 462.01/$ before the devaluation in mid-June.
Adeola Adenikinju, a professor of economics and president of the Nigerian Economic Society, said that the boost in the naira value of deposits in domiciliary accounts was the major factor driving banks' deposit growth. He also noted that domiciliary accounts constitute more than a third of deposits in the banking sector and that a large portion of this money is sitting idle.
Adenikinju suggested that the government could create dollar-denominated assets to encourage people to move their money from savings to these assets. This would help to increase the country's external reserves, which currently stand at $33.41 billion, down from $37.08 billion at the end of last year.
In summary, the increase in Nigeria's domiciliary account balance in June is a positive development, but it is important to find ways to put this money to work to support the economy.