According to the latest figures obtained from the Central Bank of Nigeria (CBN) on Thursday, March 25, currency in circulation in the country dropped by N50bn to N2.78tn in February from N2.83tn as of January.
The CBN, in the report, disclosed that the currency in circulation dropped by N70bn in January from N2.9tn as of December 2020.
The banking regulator, however, said that the currency in circulation rose from N2.5tn as of the end of October to N2.66tn in November.
The apex bank explained that it employed the “accounting/statistical/withdrawals & deposits approach” to compute the currency in circulation in Nigeria.
Techeconomy.ng gathered that the approach involved tracking the movements in currency in circulation on a transaction by transaction basis.
This is how it is being done, for every withdrawal made by a Deposit Money Bank at one of CBN’s branches, an increase in CIC is recorded, and for every deposit made by a DMB at one of CBN’s branches, a decrease in CIC is recorded.
And of course, the transactions are all recorded in the CBN’s CIC account, and the balance on the account at any point in time represents the country’s currency in circulation.
The CBN analysis of the currency in circulation saw that a large and increasing proportion of the Nigerian currency outside the commercial banking system was held by the general public who hoard a lot of the new banknotes.
Recently, this medium report that the International Monetary Fund (IMf) had claimed that the federal government turned down its advice that it should further devalue the naira, which is over 18% overvalued so as to ease external imbalances.
The IMF disclosed this through its Article 1V report for Nigeria which was published on Monday, February 8, 2021.
The report read that President Buhari’s administration has experienced pressure in the foreign exchange market due to global outflows caused by the coronavirus pandemic.