By Babajide Komolafe

There are strong indications that banks’ deposit fell by N646.96 billion in June.

Indications to this emerged last week when the Central Bank of Nigeria (CBN) credited banks with N97.045 billion for Cash Reserve Ratio (CRR) for June.

The CRR is the portion of deposits that banks must keep as cash with the CBN. Presently, the CRR for deposits mobilized from individuals and corporate bodies (private sector) is 15 percent while that of deposits mobilized from government is 50 percent.

When banks’ deposit rises, the apex bank deducts the CRR portion by debiting their accounts. But when there is shortfall in their deposits, the apex bank credits their accounts with the CRR portion of the decline.

According to the Interbank Newsletter of Kakawa Discount House, the CBN last week credited banks with N97.045 billion for CRR. This translated to N646 billion declines, in the case of private sector deposit.

The CRR credit occasioned 48.3 percent increase in the amount of idle cash in banks’ vaults (excess liquidity), which rose from N384.51 billion at the beginning of the week to N570.71 billion.

Meanwhile, the Naira has suffered N25 depreciation against British Pounds Sterling due to scarcity of the currency in the parallel market. From N265 per pounds before the CBN announced new capital requirements for Bureau De Change (BDC) operators, the exchange rate of the pounds rose to N290 per naira at the close of business on Friday.

The naira also depreciated against the European Euro within the same period, with the exchange rate rising to N232 per euro from N218 before the June 24, announcement. The naira depreciated against the dollar during the same period was however mild, with the exchange rate rising from N165 per dollar to N168 in the parallel market.

The sharp depreciation of the naira against the pounds and euro, according to Mr. Harrison Owoh, Chief Executive, H.J Trust BDC, was due to severe scarcity of the two currencies in the market. He said shortly after the CBN announcement, the two currencies just disappeared from the market, and their exchange rate began to rise steadily.