40% Of Savings In Nigerian Banks Now In US Dollar – IMF

Over 40 per cent of deposits in local banks are now in United States (U.S.) dollars, the International Monetary Fund (IMF) has said.

It blamed the trend of saving in hard currency on rising inflation and exchange rate volatility.

The IMF described the practice as a confirmation of loss of confidence in the local currency, adding that “it is usually difficult to reverse”.

According to the IMF, market participants defend their wealth by shifting to dollar savings under high and persistent inflation.

In its Report on dollar savings, the Fund said “Nigeria operates with dollar bias for international trade, finance invoicing and of recent, store of value. Over 40 per cent of Nigeria’s bank deposits are in dollars”.

The use of dollars for storing value worsened in the country following the implementation of the naira redesign policy and issuance of new banknotes by the Central Bank of Nigeria (CBN).

Under the policy, the CBN introduced new 1,000, 500 and 200 naira denominations and withdrew the old notes from circulation.

-The Nation