Latest figures from the Central Bank of Nigeria indicate that the value of the naira in circulation has risen to N3.87 trillion.
According to the money and credit statistics on the website of the CBN, as at the end of March, the naira in circulation was N3.87tn, higher than N3.69tn in February and N3.65tn in January.
However, currencies outside banks have also increased progressively during the first quarter, growing from N3.28tn in January to N3.41tn and N3.63tn in February and March, respectively.
The data revealed that over 90 per cent of currency in circulation is held outside of the banking system, indicating Nigerians are holding more cash.
In their personal statements, Muhammad Abdullahi, a member of the Monetary Policy Committee of the CBN at their March meeting, posited that the apex bank had identified high currency outside banks as one of the monetary drivers of the country’s inflation.
He said, “From available data, prices of domestic food items remain the major driver of headline inflation because of supply shortages and high cost of logistics and distribution.
“While this cannot be directly influenced using monetary policy tools, the bank’s response to the drivers of headline inflation is targeted at addressing identified monetary drivers such as money supply growth, exchange rate depreciation and Currency-Outside-Banks, the combined impact of which will dampen inflationary pressure significantly.”
In January 2024, at the height of the currency redesign policy, currency in circulation stood at N1.386tn with the percentage of the cash outside the banks standing at 57 per cent at N792.184bn.
By February, the cash outside banks rose to N843.311bn, representing 85.9 per cent of the N982.097bn that was in circulation.
It dropped further in March to 85.8 per cent with N1.445tn of the N1.683tn CIC, outside the banking system… [Source: Punch]
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