The Central Bank of Nigeria (CBN) has reported that the currency in circulation surged to an all-year-high volume of N2.5 trillion in May 2023, representing 7.4% increase from the N2.3 trillion it reported was in circulation in January this year.
The currency in circulation comprises currency outside the banking system and the vault cash of banks.
However, the apex bank in its latest figures published on the currency in circulated indicated that the total money supply in the economy marginally dropped for the first time since July 2022 to N55.5 trillion. It was N55.6 trillion in April 2023.
According to the CBN, currency outside banks also rose to N2.1 trillion in May from N2 trillion at the end of April 2023.
Available data on the currency in circulation after the cash crunch triggered by the old banknotes withdrawal and new Naira redesign policy initiated by the apex bank, especially following the Supreme Court judgment invalidating the policy measure, indicated that the volume of currency has been surging over the past months.
It would be recalled that the Naira redesign policy measure was largely criticized by ordinary Nigerians and economic analysts due to its poor implementation and the spate of scarcity it created across several cities in the country.
The CBN had justified the measure as desirable for the economy, particularly to curb excess money supply in furtherance of its sustained efforts to moderate the surging inflation in the economy, among other reasons.
According to the official data from the apex bank, between February this year when the currency in circulation ebbed to an al-time low of N982 billion and May this year, the currency in circulation has increased by over 50%, indicating the fastest growth rate in recent years.
For instance, between the 29% month-on-month dropped in February, currency in circulation rose by 71% to N1.6 trillion in March and again surged by 41% from the recorded volume in March to N2.3 trillion in April 2023.
Similarly, currency outside banks has also maintained the same trend, growing by 71% and 44% month- on-month in March and April 2023 respectively.
The current rate of increase in currency in circulation indicates that the economy is fast approaching the 2022 trend when the currency in circulation grew month-and-month and peaked at about N3.3 trillion in May last year.
