The Central Bank of Nigeria (CBN) has reported that total currency in circulation in the nation’s economy surged to N5.24 trillion in January this year, representing a 43.5% increase year-on-year (y-o-y) when compared to the N3.65 trillion in January 2024.
This development showed that sustained measures by the apex bank to raise lending rates as a monetary policy option of combating the surging inflation rate had been a herculean task over the past years.
The latest published data by the apex bank on the currency outside the banks’ vaults indicated that N4.74 trillion, representing 90.4%, was held outside the banking system, still showing that efforts by the monetary authorities to digitalize transactions in the economy are not achieving much results.
According to the report, when compared to the corresponding month of last year, currency outside banks in January this year increased from N3.28 trillion in January 2024 to N4.74 trillion, indicating a 44.5% y-o-y increase.
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An analysis of the apex bank’s reports reflected that in January 2024, out of the currency in circulation, which totalled N3.65 trillion, 89.9% was outside banks but by February, the total currency in circulation in the economy rose to N3.69 trillion, with N3.41 trillion with 92.5% outside the banking system. In March last year, the currency in circulation totalled N3.87 trillion out of which N3.63 trillion was held outside the banks’ vaults.
The data showed that there was a steady rise in the currency in circulation all through the second quarter of the year.
However, at the beginning of the third quarter, precisely by July, there was a marginal drop in the currency in circulation to N4.05 trillion out of which currency outside banks also dropped to N3.67 trillion.. This trend was reversed in August and September as currency in circulation continued the upward trend.
The apex bank’s data further revealed that the surging momentum was sustained through the remaining months of the year such that by November, currency in circulation had surged to N4.88 trillion, with N4.65 trillion outside banks, representing the highest proportion of currency held outside the banking sector in 2024. The December figures were not posted on the CBN website as of the time of this report.
