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.

Nigeria’s Currency Circulation Jumps To N66.4trn -CBN

The Central Bank of Nigeria CBN) has reported that Nigeria’s total money supply (M2) increased to N66.4 trillion in September 2023. The data from the apex bank on money supply in the economy in the month other review comprising demand deposits, quasi-money, and currency outside banks, reflected increases in the components. Specifically, quasi-money, which pertains to financial tools that can be easily converted to cash, rose from N40.8 trillion in the preceding month to N41 trillion; demand deposits, primarily made up of funds in banks accessible without prior notice, moved from N21.7 trillion to N23 trillion while currency outside banks’ vaults marginally increased from N2.29 trillion to N2.3 trillion. Over the past few years, Nigeria’s money supply has been increasing based on the micro and macroeconomic whirlwinds of the economy, particularly the surging inflation rate, FX pressure on the Naira, and declining interest rates. The money supply, also known as M2, represents the total amount of money available in the economy at a particular moment, including physical currency such as coins and banknotes as well as deposits maintained by individuals, enterprises, and institutions in banks and other financial entities. However, the nation’s Net Foreign Assets dipped in September from N7.1 trillion to just N591 billion while Net Domestic Assets rose to N66.5 trillion from N58.3 trillion. A further analysis of the M2 trend during the month under review showed that the net domestic credit rose from N87.2 trillion to N92.7 trillion, thereby raising the net domestic credit to GDP by around 42.7 per cent. The breakdown of the net domestic credit indicated that credit to the government marginally increased to N34.1 trillion from N32.5 trillion while credit to the organized private sector surged from N54.7 trillion in the preceding month to N58.6 trillion, representing 63% of net domestic credit.