Nigeria’s Currency Circulation Rises By N230bn In October

Despite reported scarcity of naira in the banking system, data made available by the Central Bank of Nigeria (CBN) showed that currency in circulation rose eight per cent to a new high of N2.99 trillion by the end of October, 2023. The value represents a N230 billion increase from the N2.76 trillion recorded in September, 2023, and an increase of N1.6 trillion from N1.39 trillion recorded at the beginning of 2023. The apex bank defines the currency in circulation as currency outside the vaults of the Central Bank of Nigeria, meaning, all legal currency notes in the hands of the general public and in the vaults of the Deposit Money Banks (DMBs). With this new high of almost N3 trillion, currency in circulation appears to be on the rise to the level it was in October 2022 (N3.29 trillion) before the naira redesign policy of the CBN. Analysts say, it is surprising the currency in circulation is increasing, while the deposit money banks say there is scarcity of naira, with many of the banks restricting withdrawals by depositors to a maximum of N 20,000 as was the case with some banks in Lagos last week. “Certainly, if the apex bank said money in circulation it has to be naira, not the dollar and pounds sterling that is clearly a scarce commodity. How come, here in Lagos, many of the banks could not give more than N20,000 and their ATM machines perpetually dry last week”, David Agumo argued. It is widely believed that it was as a result of the scarcity of the naira that made the CBN announce the continued usage of the old naira notes as legal tenders indefinitely. While some economic analysts, believe the development may be attributed to the apex bank’s decision to extend the deadline for the old notes and the assurance of sufficient currency stock may indicate efforts to stabilise the situation and address any cash scarcity concerns, others say that decision made only recently can only affect currency in circulation for November and not October.

No Shortage Of Naira Notes In Circulation, Says CBN

The Central Bank of Nigeria (CBN), has assured Nigerians that there is adequate supply of Naira notes in the economy. The bank’s Director, Corporate Communications, Isa AbdulMumin, said this in a statement on Thursday in Abuja. Some bank customers in recent times have been complaining about scarcity of Naira notes at the counters, Automated Teller Machines (ATMs), Point of Sale (PoS), and Bureaux de Change (BDCs). According to Abdulmumin, the seeming currency scarcity is occasioned by large volume withdrawal of cash from various CBN branches by Deposit Money Banks (DMBs). He said that panic withdrawals by bank customers was also partly responsible for the seeming scarcity. “The attention of the CBN has been drawn to reports of alleged scarcity ofcash at banks, ATMs, PoS and BDCs in some major cities across the country. “Our findings reveal that the seeming cash scarcity in some locations is due largely to high volume withdrawals from the CBN branches by DMBs and panic withdrawals by customers from the ATMs. “While we note the concerns of Nigerians on the availability of cash for financial transactions, we wish to assure the public that there is sufficient stock of currency notes for economic activities in the country. “The branches of the CBN across the country are also working to ensure the seamless circulation of cash in their respective states of operation,” he said. The director advised members of the public to guard against panic withdrawals as there was sufficient stock to facilitate economic activities. He also advised Nigerians to embrace alternative modes of payment, which would reduce pressure on using physical cash. 

Nigeria’s currency circulation hits N2.60trn in June

Nigeria’s currency in circulation climbed to N2.60 trillion in June 2023. Currency in circulation is the amount of cash in paper notes or coins issued by the CBN to conduct transactions. According to the latest data from the Central Bank of Nigeria (CBN), the figure rose by 88 percent from N1.39 trillion in January to N2.60 trillion in June 2023. The amount of currency in circulation in Nigeria fluctuated in the first half of 2023. In January, it stood at N1.39 trillion and fell to N982,097 billion in February. However, currency circulation rose to N1.68 trillion in March. In April, May, and June, it increased to N2.48 trillion, N2.53 trillion, and N2.60 trillion, respectively. In October 2022, the CBN announced that it would be redesigning three of the existing banknotes: the N200, N500, and N1000 notes. The new notes were due to be circulated on December 15, 2022, while the old notes would remain legal tender until January 31, 2023. The apex bank said it decided to redesign the banknotes because of concerns about the management of currency in circulation, particularly those outside the banking system. The CBN said currency management has faced several challenges in recent years, including counterfeiting, the use of cash for illegal activities, and the hoarding of banknotes by members of the public. Crude oil prices may rise on demand increase Experts say the prices of crude may likely increase in days to come as demand outpaces supply following a cut by the Organization of Petroleum Exporting Countries (OPEC), particularly that of major producer Saudi Arabia. The International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) earlier projected oil demand to outpace supply this year, leading to overall inventory draws to the tune of 400,000 to 500,000 barrels per day (bpd), mostly accounted for by the second half of the year (2023). Reacting to the development, experts at JP Morgan believe that the disparity between demand and supply will lead to increased oil prices. “It appears that the voluntary cuts announced by eight OPEC countries in April plus the additional 1 million bpd of unilateral Saudi cuts that just started in July are having the desired effect, with sour barrels becoming scarcer.” JP Morgan also stated that a rise in driving and flying activities this summer has put a strain on supplies as refineries are struggling to cope, meanwhile, there was also a drop in Russian crude supplies in July 2023. When demand outweighs supply, prices will rise, and analysts expect that the recent rise in crude oil will extend even further. Earlier this month, Secretary General of the International Energy Forum (IEF), Joseph McMonigle, told CNBC that crude oil demand bounced back to pre-Covid levels quickly, but supply is having a tougher time catching up. “So, for the second half of this year, we are going to have serious problems with supply keeping up, and as a result, you are going to see prices respond to that.” If crude oil prices rise on the global market, it means two things for the Nigerian market: Increased oil revenues are needed as Nigeria plans to roll out intervention schemes to cushion the effect of the fuel subsidy removal on the country’s citizens. In a prior announcement, the government has made it known that among other plans; it is focused on mass transportation, and alternative energy sources like compressed natural gas as well as reducing the impact of transportation costs as intervention schemes. An increase in the cost of fuel will be unavoidable because the country has no refining capacity as citizens await the end of the current rehabilitation of the Port Harcourt, Warri and Kaduna refineries. So, as more fuel imports come into the country, facilitated by private companies, fuel pump prices could increase. This also means that Nigerians need to increase their earnings, to survive a possible fuel pump price hike in the future.